The USD/JPY has risen to approximately 148.00, gaining nearly 2% due to a US-China tariff reduction sparking risk appetite. Both countries agreed on a 90-day tariff reduction, with the US cutting duties to 30% and China lowering them to 10%, enhancing the US Dollar’s appeal.

This trade truce has led to a surge in risky assets, impacting safe-haven currencies like the Japanese yen. A sharp increase in US bond yields, with the 10-year US Treasury yield reaching 4.45%, has lifted the US Dollar Index (DXY) by over 1.25% to 101.74, its highest in a month.

Japan’s Current Account Surplus

Japan’s March current account surplus exceeded expectations at JPY 2.723 trillion. However, Japanese investors sold foreign bonds, reducing overseas exposure in March amid market volatility, reflecting cautious sentiment despite favourable trade news.

Technically, USD/JPY is bullish, trading near 148.00, supported by a 20-day Simple Moving Average. Resistance is around 149.56 to 150.37, with support from 145.69 to 146.45. Indicators such as RSI and MACD suggest neutral to bullish conditions, with prospectively deeper corrections below 146.30 or further gains above 149.60.

What we’re seeing here is a pronounced bullish trend in USD/JPY, driven not by one isolated event, but rather a series of clear market reactions that have come together recently. Central to the sudden rise has been the thaw in trade tensions between the US and China, following the announcement of a 90-day duty reduction. The lowered tariff rates—30% from the US and 10% from China—have not just improved investor sentiment generally, they’ve directly increased appetite for yield-bearing and risk-sensitive assets. That, in turn, has pressured traditional safe havens like the yen.

Impact of Us Treasury Yields

This rise in appetite for risk has also coincided with a steep rise in US Treasury yields. When the 10-year yield pushes up towards 4.45%, capital tends to favour the dollar—not just from yield-chasing flows, but also as a bid for relative stability in dollar-denominated assets. As bond markets reprice expectations around interest rates, the surge in DXY by over 1.25% shouldn’t come as a surprise. The dollar is now sitting at its highest level in a month, reflecting this very repricing.

Meanwhile, March data out of Japan showed an unexpectedly high current account surplus. But despite this strong trade position, Japanese investors became net sellers of foreign bonds. That move is telling—it suggests risk-off positioning locally, mostly driven by market shakiness rather than economic fundamentals or trade balances. So, even though domestic figures were generally supportive, capital flows pointed in a different direction.

Technically, there’s more to be aware of. The currency pair remains well supported on the charts. It’s currently holding above its 20-day Simple Moving Average, which tends to act as a dynamic floor in upward movements. Resistance levels between 149.56 and 150.37 will likely play a large role in shaping near-term behaviour. If price can break and close consistently above the 149.60 mark, there’s room for extension towards areas not seen in several months. Conversely, a fall through 146.30 could mark the beginning of a steeper retracement, particularly if Treasury yields lose ground.

Indicators like the MACD are still showing momentum favouring the upside, though actual turnarounds can happen quickly in any technical pause or risk-off move globally. RSI has stayed within range—neither overbought nor oversold—but has started to nudge upward again, adding to the directional bias in favour of the dollar.

Given the present configuration, it’s not enough just to monitor price levels. One has to follow fixed income markets just as closely. The bond market has effectively become the weather vane here, and rapid changes in real yields are being mirrored almost tick-for-tick in USD/JPY pricing.

In the weeks ahead, with global sentiment shifting in response to both macro policy action and trade dynamics, sensitivity to yield differentials and capital flow movements will both intensify. That’s why we think watching auction results, Treasury spreads and even BOJ policy messaging—not just headline rates—can offer the edge. Short-term price momentum remains tilted upward, but the risk of volatility breaking that pattern increases if support levels start to slip in tandem with falling yields or deteriorating global sentiment.

Create your live VT Markets account and start trading now.