Yen and Aussie Dollar Outlook: Inflation, Trade Tensions, and Central Bank Moves Drive Direction

April 18, 2025 – DailyForex.pk
Rising US tariffs, shifting inflation dynamics, and uncertain central bank guidance are shaping the short-term outlook for both the Japanese Yen (JPY) and Australian Dollar (AUD). While USD/JPY remains sensitive to BoJ policy expectations and geopolitical risk, AUD/USD is reacting to China’s stimulus efforts, domestic labor trends, and tariff-related global trade pressures.

🇯🇵 USD/JPY Forecast: BoJ Caught Between Inflation and Trade War Fallout

Recent inflation data from Japan revealed:

Annual inflation eased slightly to 3.6% in March (from 3.7% in February)
Core inflation rose to 3.2% (from 3.0%)

This would typically justify tightening by the Bank of Japan, but with President Trump’s new tariff policies heightening global uncertainty, the BoJ may pause on rate hikes in the near term.

Key developments:

BoJ is expected to downgrade its 2025 growth forecast at the next meeting
Ongoing US-Japan trade talks may determine the scale of any economic hit
BoJ Governor Kazuo Ueda recently acknowledged the potential need to respond to “tariff-driven shocks”

USD/JPY Reaction: The Yen remains tied to risk sentiment. Safe-haven demand could drive the pair lower, while stronger risk-on flows and progress in trade talks could support USD strength.

📉 USD/JPY Scenarios to Watch

Bullish USD/JPY: Hawkish Fed signals or resolution in trade tensions could push the pair above 145
Bearish USD/JPY: Fresh tariff threats, dovish BoJ rhetoric, or safe-haven flows could send USD/JPY toward 140.309 support

Near-Term Outlook:

The Fed’s stance remains critical. Any shift toward rate cuts could drag USD/JPY lower
On the other hand, hawkish commentary from FOMC members may boost the dollar, pushing the pair higher

Technical indicators suggest a bearish bias on the daily chart, with support at 140.309 and resistance near 145.

🇦🇺 AUD/USD Outlook: Aussie Dollar Sensitive to Tariffs, RBA Policy, and China

The Australian Dollar faces downside risk as:

Unemployment rose to 4.1% in March
Participation rate increased, but the data adds pressure on the RBA
20% of Australian jobs are in trade-related sectors, making the AUD vulnerable to global demand shocks

Key AUD/USD drivers:

RBA guidance remains cautious, but traders are pricing in possible rate cuts later this year
China accounts for one-third of Australia’s exports—any weakness or stimulus in China directly impacts AUD demand
Tariff risks could disrupt supply chains and trade flows, affecting AUD/USD performance

📊 AUD/USD Scenarios to Watch

Bullish AUD/USD: Hawkish RBA tone, rising US-China tensions, or soft US data could lift the pair toward $0.65
Bearish AUD/USD: Dovish RBA stance or easing US tariffs could drag the pair below $0.63623, targeting the 50-day EMA

Short-Term Outlook:

In the U.S. session, traders will watch Fed rate cut expectations
A hawkish Fed could pressure AUD/USD toward $0.63
On the contrary, expectations of multiple Fed cuts may weaken the USD and help AUD/USD climb toward $0.65

📌 Conclusion: FX Traders Eye Central Bank Moves and Trade Headlines

With inflation rising in Japan and trade-linked uncertainty gripping both Japan and Australia, USD/JPY and AUD/USD are entering a volatile phase. Currency traders should watch:

Fed and BoJ policy shifts
Progress in US-Japan trade negotiations
China’s stimulus measures and RBA guidance

As central banks reassess their strategies amid mounting global risks, forex markets remain highly sensitive to tariff updates, growth revisions, and geopolitical signals.

📉 For the latest updates on USD/JPY and AUD/USD, visit www.dailyforex.pk — your trusted source for forex market insights and technical analysis.

Hamza Shah