S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico MarketFacts:
- Market implies 3.3 rate cuts in the US (30% chance of fourth rate cut at the end of 2025) and 0.8 rate hike in Japan (80% chance of one rate hike at the end of 2025)
- RSI is currently at 44.5, while MACD has recently created bullish crossover
- Tokyo’s core inflation (excluding fresh food) jumped to 3.4% year on year from 2.4% in March and was above the consensus forecast of 3.2%
Recommendation:
- Transaction: Long position on USDJPY at market price
- Target: 146.478
- Stop: 140.416
Opinion:
The RSI is in bullish divergence, forming higher highs and approaching a level that recently served as a strong reversal zone. A break above this level could signal renewed bullish control. The MACD is widening following a bullish crossover. The take-profit level is set just below the 38.2% Fibonacci retracement, which coincides with the 50-day EMA and is expected to act as resistance. The stop-loss is placed just below the recent closing low at 140.416.
From a macroeconomic perspective, the divergence between US and Japanese monetary policies creates a favorable trading window. Markets have likely overestimated Fed rate cuts given US economic resilience, while BOJ’s normalization path faces near-term delays due to external risks from US tariff threats. This policy timing mismatch supports USDJPY appreciation in the short term before longer-term fundamentals eventually favor the yen.
