Key Points
- USD/JPY trades at 155.235, up 0.39%.
- Dollar index rises 0.2% to 97.90 amid tariff uncertainty.
- Yen pressured by trade tensions and China export controls.
The Japanese yen softened on Tuesday as markets reassessed the fallout from renewed uncertainty surrounding US trade policy. USD/JPY climbed to 155.235 (+0.39%), reflecting a firmer US dollar and a cautious tone across global markets.
The dollar index rose 0.2% to 97.90, recovering from earlier weakness as China and Japan reopened from holidays and President Donald Trump warned against countries retreating from recently negotiated trade deals.
The Supreme Court’s decision to strike down Trump’s emergency tariffs briefly unsettled markets. However, the administration quickly imposed a new 15% levy under a different legal framework, reigniting trade uncertainty. Trump also signalled that countries that “play games” could face even higher duties.
Adding pressure to the yen, China announced export controls targeting Japanese companies, highlighting deteriorating regional trade relations.
Separately, reports suggested US authorities led so-called “rate checks” last month to support the yen without a formal request from Tokyo, a development that raised questions about coordinated currency stability efforts.
Fed Outlook and Global Shifts
Renewed trade uncertainty comes as investors reassess global growth prospects and central bank policy paths. The Federal Reserve is widely expected to keep rates on hold until at least June. Fed Governor Christopher Waller indicated openness to maintaining current policy if upcoming labour data confirms economic resilience.
Elevated US yields continue to support the dollar, maintaining upward pressure on USD/JPY. Meanwhile, geopolitical risks remain elevated, with reports of US diplomatic staff reductions in Beirut amid rising concerns over potential military escalation involving Iran.
The European Parliament has also postponed a vote on a US trade deal, underscoring the broader ripple effects of renewed tariff tensions.
Technical Analysis
USDJPY is trading near 155.24, up roughly 0.4% on the session, as the pair attempts to stabilise following its recent pullback from the 159.45 high.
The broader uptrend remains intact on the daily timeframe, but price action over the past few weeks reflects a corrective phase rather than a clean continuation move.
The pair is currently hovering around the short-term moving averages, with the 5-day (154.95) and 10-day (154.02) turning slightly higher.
The 20-day (154.72) sits close to current price, while the 30-day (155.49) remains just overhead, forming a near-term resistance zone around 155.50–156.00. This clustering suggests the market is in a transitional phase, with momentum gradually rebuilding but not yet fully bullish.
Immediate support lies near 153.00–153.50, followed by stronger structural support around 151.50–152.00, where buyers previously stepped in during the January correction.
A sustained move above 156.00 would strengthen upside momentum and shift focus back toward 158.00–159.50, while a failure to hold above 153.00 could reopen downside pressure in the short term.
Cautious Outlook
USD/JPY remains supported by dollar resilience and policy divergence, but gains may be capped if trade volatility intensifies or if geopolitical risks trigger stronger safe-haven flows into the yen.
A sustained move above 156.70 would strengthen the bullish case and reopen the path toward the January high near 159.45. Conversely, renewed intervention rhetoric from Japanese authorities or softer US data could pressure the pair back toward 153.00.
For now, the bias remains cautiously bullish above short-term moving averages, with trade headlines and US data likely to dictate near-term direction.
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