Key Points
- USD/JPY drops 0.89%, closing at 140.797 after hitting a seven-month low of 140.615.
- Japan expresses concern over new U.S. auto tariffs, calling them inconsistent with the 2019 bilateral trade deal.
- Traders eye upcoming U.S.–Japan currency talks, raising speculation of yen intervention pressure.
The dollar slipped sharply against the yen on Monday, with USD/JPY falling to 140.615, its lowest level in seven months, as fresh political tensions between Tokyo and Washington triggered renewed demand for the Japanese currency. The pair closed at 140.797, down nearly 0.9%, amid mounting market speculation that Japan could soon be pressured by the U.S. to support the yen in light of Washington’s ballooning trade deficit.
The move accelerated after Prime Minister Shigeru Ishiba told parliament that Japan held “grave concern” over the 25% automobile tariffs recently announced by President Trump—tariffs that appear to contradict prior Section 232 assurances from the 2019 U.S.–Japan trade agreement.
Political Tensions Resurface, Currency in Focus
While Japan reaffirmed it has no plans to withdraw from the 2019 deal, Ishiba emphasised the lack of consistency between that agreement and Trump’s latest actions. The auto sector is a cornerstone of Japan’s export economy, and the revived tariffs have reignited fears of a breakdown in trade cooperation, particularly as Tokyo begins new talks with Washington.
Japan’s top negotiator Ryosei Akazawa recently met with U.S. officials in Washington, and Finance Minister Kato is set to meet Treasury Secretary Scott Bessent this week. Currency exchange rates will be a focal point of those discussions, especially as the yen trades near intervention territory. Analysts speculate that the U.S. may seek Japan’s help to strengthen the yen to narrow the trade gap—putting additional policy pressure on the Bank of Japan just ahead of its scheduled meeting.
Technical Analysis
The 15-minute chart of USDJPY reveals a sharp bearish breakdown, with price tumbling from the 142.00 region to a low of 140.614. After consolidating near the 142.70 resistance area earlier, momentum sharply shifted on April 19th as bearish pressure mounted and price sliced through key moving averages. This confirms a clear trend reversal from the prior tight range.
Picture: USDJPY dives below 141.00 as bearish momentum takes hold, as seen on the VT Markets app
The MACD (12,26,9) supports the bearish bias, having crossed below the signal line decisively and pushed into negative territory. However, the histogram is now turning positive, hinting at a possible short-term relief rally or pause in selling. Yet, with price still well below the 30-period moving average and trend momentum intact, any recovery is likely to face resistance near the 141.20–141.50 zone.
With USD/JPY now trading well below the 142.00 handle, the next support zone lies near 140.00, a key psychological and technical level. A break below could open a path toward 138.80, last tested in August 2023. Resistance is now at 141.60–142.00, but recovery seems unlikely in the near term unless BOJ or U.S. officials deliver a coordinated policy signal.
