FOREX: USDJPY Drifts Back Above 143.00 as US Data/BOJ Awaited

• GS have raised their US tariff assumptions for the “second time in less than a month” and with it their 12-month recession probability from 20% to 35%.
• They see the average US tariff rate rising 15pp in 2025, their previous risk case, rather than 10pp.
• “We expect President Trump to announce reciprocal tariffs that average 15% across all US trading partners on April 2, although we expect product and country exclusions to ultimately whittle the addition to the average US tariff rate down to 9pp.”
• They see core PCE inflation at 3.5% Y/Y end-2025 (+0.5pp), GDP growth of 1.0% Y/Y end-2025 (-0.5pp) and the unemployment rate at 4.5% end-2025 (+0.3pp).
• They bring forward their single 2026 rate cut into 2025 and now expect three consecutive cuts in July, Sept and Nov, leaving their terminal rate forecast unchanged at 3.5-3.75%.
• "The downside risks to the economy from tariffs have increased the likelihood of a package of 2019-style “insurance” cuts, which we now see as the modal outcome under our revised economic forecast. While the Fed leadership has downplayed the rise in inflation expectations so far, we think it does raise the bar for rate cuts and in particular puts greater emphasis on a potential increase in the unemployment rate as a justification for cuts.”

SFIK5 96.00 calls paper paid 1.5 on 8K.

• In the equity space, S&P E-Minis traded sharply lower Friday and the contract maintains a softer tone. Attention is on key support and the bear trigger at, 5559.75, the Mar 13 low. A break of this level would confirm a resumption of the downtrend that started Feb 19, and open 5483.30, a 2.00 projection of the Dec 6 ‘24 - Jan 13 - Feb 19 swing. Moving average studies are in a bear-mode position, highlighting a dominant downtrend. Key short-term resistance has been defined at 5837.25, the Mar 25 high. Initial resistance is 5651.25, the Mar 21 low.
• EUROSTOXX 50 futures are trading lower today and this has resulted in a breach of key support at 5229.00, the Mar 11 low. The print below this support undermines a bullish theme and signals scope for a deeper retracement. Sights are on the 5200 handle. It has been pierced, a clear break would open 5079.00, the Feb 3 low. It is still possible that recent weakness is part of a broader correction. Initial resistance to watch is 5359.39, the 20-day EMA.