Insights 
VT 
Key Points:
- USD/JPY fell to 144.14, testing two-week lows amid dollar softness.
- Japan’s May industrial production underwhelmed, while U.S. tariffs on Japanese cars remain unresolved.
The Japanese yen extended its recent gains on Monday, climbing toward 144 per U.S. dollar—a two-week high—as the greenback struggled under the weight of a more dovish Federal Reserve outlook and rising fiscal risks in the U.S.
On the domestic front, Japanese industrial production rose in May but fell short of expectations. Analysts blame persistent headwinds from U.S. tariffs—particularly the 25% levy on Japanese car imports, which remains unresolved in bilateral trade talks. This tariff continues to cast a long shadow over Japan’s auto-heavy industrial economy.
Despite this, the yen found support from broader risk-off sentiment and Fed-driven dollar weakness.
Continued softness in Japan’s production could limit long-term yen upside unless accompanied by stronger BoJ policy signals. However, in the near term, USD/JPY is more likely to be dictated by U.S. macroeconomic direction.
Technical Analysis
The pair has slipped to the 144.14 area, testing recent intraday lows (~144.09). Short-term moving averages (5, 10, 30) are descending, with the 5‑period MA crossing below the 10 and 30, signaling bearish momentum. MACD is trending negative, reinforcing the short-term downtrend.
Picture: Yen firms amid softer US yields, as seen on the VT Markets app
Support lies just below at the 143.90–144.00 zone; a clean break could pave the way toward 143.50. On the upside, any bounce would face resistance near the intraday high around 144.75–145.00.
This move comes ahead of this week’s highly anticipated U.S. labour data, with markets expecting potential cracks in the job market. A weak print would add fuel to bets that the Fed will begin cutting rates as early as July. According to the CME FedWatch Tool, there’s already a near 20% probability of a July cut, with deeper easing priced in by December.
If the upcoming jobs report confirms labour market weakness, USD/JPY could break below the 144.00 threshold and test support at 143.90. A stronger-than-expected print, however, could stabilise the pair back toward 144.70–145.00 resistance.
Tankan Survey Eyed for Domestic Clarity
Markets are also looking ahead to Tuesday’s release of the Bank of Japan’s Tankan survey—a key gauge of business confidence in Japan. Traders hope it will provide clues about corporate resilience amid rising global trade friction and weak consumer demand.
If the Tankan shows declining optimism, it may trigger temporary yen weakness—though the overall trajectory may remain yen-favourable if U.S. data continues to disappoint.
