A confluence of high-impact economic events and escalating global trade tensions marks this week’s trading landscape. Key macroeconomic releases—including US Final GDP and Core PCE Price Index, UK Retail Sales, and Canadian GDP—are set to drive volatility across major currency pairs. Of particular interest is USDJPY, which has recently shown signs of reversing its multi-month downtrend. However, broader sentiment remains cautious, especially in light of US President Donald Trump’s announcement of a 25% tariff on imported cars and light trucks. The move has rattled global markets, particularly in export-heavy economies like Japan, and threatens to disrupt automotive trade flows. With both technical and fundamental catalysts in play, market participants will be closely monitoring data and policy developments for directional cues.
Since peaking at 158.866 on January 10, USDJPY has been in a sustained downtrend, characterized by a sequence of bearish Japanese candlestick formations and a technical reversal pattern known as a “failure swing.” This bearish bias was further validated by the emergence of a “Death Cross,” as the 20-period Exponential Moving Average (EMA) crossed below the 50-period EMA—commonly viewed as a medium-term bearish confirmation.
However, on March 11, the pair staged a rebound from the 146.530 low, driven by a bullish “failure swing” reversal. The subsequent higher low at 148.173 held above the previous trough, followed by a decisive break above the 150.138 resistance level, signaling a potential shift in trend direction.
Momentum indicators support this bullish reversal. The Momentum Oscillator emerged above the 100 threshold, and the Relative Strength Index (RSI) is above the 50 neutral line—both indicative of underlying upside bias.
Nonetheless, it’s worth noting that price action remains below the 50-period EMA, and the 20-period EMA has yet to cross back above it. Until that alignment occurs, some caution may be warranted in confirming the sustainability of the emerging uptrend.
Key Resistance Levels
If buyers maintain control of the market, traders may shift their focus to the following four potential resistance levels:
150.922: The first level of resistance is projected at 150.922, which aligns with the trough marked February 7.
152.181: The second price target is seen at 152.181, corresponding to the weekly resistance, R3, estimated using the standard Pivot Points methodology.
153.317: The third price target is seen at 153.317, corresponding to the 261.8% Fibonacci Extension drawn from the high point, 150.138, to the low point, 148.173.
156.497: An additional upside target is determined at 156.497, reflecting the 423.6% Fibonacci Extension drawn from the high point, 150.138, to the low point, 148.173.
Key Support Levels
If sellers take control of the market, traders may focus on the following four key support levels:
150.138: The initial support level is seen at 150.138, representing the peak marked on March 19.
149.195 The second support level is positioned at 149.195, aligning with the weekly Pivot Point, PP, estimated using the standard methodology.
146.530: The third downside target is noted at 146.530, corresponding to the trough from March 11.
144.111: An additional downside target is determined at 144.111, reflecting the 261.8% Fibonacci Extension drawn from 148.551 to 151.295.
Fundamentals
Global markets slid after US President Donald Trump announced a 25% tariff on imported cars and light trucks, escalating trade tensions with key allies like Japan, Canada, and the EU. The new tariffs, set to begin April 3, drew sharp criticism from foreign leaders and sparked threats of retaliation. Auto stocks across Asia tumbled, and analysts warned the move could hurt global car demand, raise vehicle prices, and cost US manufacturing jobs. While the United Auto Workers praised the policy, industry groups and economists voiced concerns over its broader economic impact and potential disruption to the global trade system.
Japanese Prime Minister Shigeru Ishiba vowed to consider “all options” in response to the US decision to impose a 25% tariff on imported automobiles, a move analysts warn could significantly harm Japan’s export-reliant economy. The tariffs, announced by President Trump, are set to begin next week and come despite Japan being a major investor in the US. Shares of Japanese automakers dropped following the news, with experts estimating the tariffs could shave 0.2% off Japan’s GDP. Automobiles account for over a quarter of Japan’s exports to the US and are a key driver of domestic wage growth.
Conclusion
As markets brace for a series of high-impact economic releases, traders remain on edge amid mounting geopolitical and trade-related risks. The evolving price action in USDJPY offers early signs of a trend reversal, but technical confirmation is still pending. Meanwhile, President Trump’s new auto tariffs have injected fresh volatility into global markets, weighing heavily on export-driven economies and automotive stocks. With key support and resistance levels in play and uncertainty clouding both fundamentals and sentiment, traders should remain nimble and data-focused as the week progresses.
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