This Week's Market Strategy - March 18, 2025 (Tuesday)
Last week, the closely watched US Consumer Price Index came in at 2.8%, below the expected 2.9%.
Additionally, the Producer Price Index remained flat at 0% from January, also falling short of the expected 0.3% increase. Furthermore, retail sales announced yesterday also came in below expectations.
However, since the introduction of the Trump administration's tariff threat policy has intensified global trade frictions, US long-term interest rates (which are highly correlated with USD/JPY) have been rebounding. Consequently, USD/JPY has risen approximately 3 yen from last Tuesday's low of 146.542 yen to the current mid-149 yen level. If the Bank of Japan raises rates tomorrow (low probability), a sharp decline is possible.
USD/JPY is in a corrective rally within a downtrend.
However, as further upside is expected, on any corrective dips, buying is recommended in the early 148 yen range, with stop-loss below 146.5 yen, and take-profit recommended above the 150 yen level.
For medium to long-term, shorting is recommended at the 153 yen level, with stop-loss above 154 yen.
Regarding crude oil futures, OPEC+ decided to gradually increase production starting in April, and the possibility of an end to the Ukraine war appears to be outweighing the bullish factor of intensified global trade friction from Trump's tariffs. WTI crude oil has traded with a high in the low-68 dollar range and a low in the low-65 dollar range over the past week.
Should the Ukraine war end, further declines are expected. Conversely, if the Trump-Putin phone call breaks down, crude oil could break out of range and surge sharply.
WTI crude oil's decline appears to be in its final stages, but depends on today's Trump-Putin talks. Given excessive uncertainty, a wait-and-see approach is recommended.
Gold prices continue to reach all-time highs above the $3,000 level, supported by intensifying global trade friction.
From a long-term perspective, buying is recommended on any dips below the $2,900 level for gold.
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