USD\/JPY slipped to about 154.35 in early Asian trading on Monday as the US Dollar weakened against the Japanese Yen amid uncertainty over US tariffs. Markets are watching the US Producer Price Index (PPI) for January, due on Friday.<\/p>\n
Uncertainty followed a US Supreme Court decision that struck down President Donald Trump\u2019s use of emergency powers to impose reciprocal tariffs. Trump said on Saturday he would raise the global tariff from 10% to 15% and start other investigations.<\/p>\n
In Japan, the National Consumer Price Index (CPI) rose 1.5% year on year in January, down from 2.1% in December, the lowest since March 2022. Core inflation was 2% in January, a two-year low and in line with the Bank of Japan\u2019s target.<\/p>\n
The slower inflation data reduced expectations for an immediate Bank of Japan rate rise, which can limit Yen gains. After Prime Minister Sanae Takaichi\u2019s snap election win, markets are tracking possible fiscal spending plans.<\/p>\n
Takaichi said necessary spending would be funded as much as possible through the initial budget. She also said she aims to lower the debt-to-GDP ratio and restore fiscal sustainability.<\/p>\n
Looking back to early 2025, we saw the market react to US tariff uncertainty and soft Japanese inflation, which created conflicting pressures on the USD\/JPY pair. The threat of higher global tariffs by the US pushed traders towards the safe-haven Yen. At the same time, Japan\u2019s low inflation reading tempered expectations for a Bank of Japan (BoJ) rate hike.<\/p>\n
That dynamic has evolved significantly over the past year. The threatened US tariffs were partially implemented in late 2025, creating ongoing volatility in global trade and sustaining the Yen’s appeal as a safe haven. As of February 2026, continued trade friction, particularly with Asia, is keeping this defensive demand for the Yen alive.<\/p>\n
The inflation picture in Japan has also shifted from the low point we saw in January 2025. The most recent data for January 2026 showed national CPI holding at 2.2%, keeping it above the BoJ’s target for several consecutive months. This sustained pressure led the BoJ to finally raise its key policy rate to 0.1% in November 2025, a pivotal move that continues to support the currency.<\/p>\n
This policy shift is now clearly reflected in bond yields, a key driver for the currency pair. The gap between the 10-year US Treasury yield, now at 3.9%, and the 10-year Japanese government bond yield, at 0.9%, has narrowed considerably from its peak. This makes holding Yen more attractive relative to the US dollar than it has been for years.<\/p>\n
Given these developments, we should consider strategies that benefit from a limited upside in the USD\/JPY, which currently trades near 148.50. Selling out-of-the-money call options on USD\/JPY could be a prudent way to collect premium, reflecting the view that a stronger Yen is the more likely path. Alternatively, buying JPY call options against the USD offers a direct way to position for further Yen appreciation driven by policy divergence and risk sentiment.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" USD\/JPY dips near 154.35 as tariff uncertainty weakens dollar; Japan inflation cools, delaying BOJ hike expectations.<\/p>\n","protected":false},"author":62,"featured_media":17054,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-42499","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/42499","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=42499"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/42499\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/17054"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=42499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=42499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=42499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}