Insights 
VT 
The USDJPY currency pair is near a major trendline, erasing previous losses. Recent US-UK trade deal expectations boosted the USD, with tariffs set at 10%. This baseline tariff could challenge relations with other nations, especially the EU. The Federal Reserve’s stance on interest rates has shifted, reducing rate cut expectations from over 80 to 68 basis points by year-end, further strengthening the USD.
The Japanese Yen remains affected by global events rather than domestic factors, acting as a safe haven alongside the Swiss Franc. The Bank of Japan maintained its interest rates and emphasized trade developments. The central bank suggests potential rate hikes with favourable trade deals but may delay adjustments if outcomes disappoint.
Key Trendline Dynamics
On the daily and 4-hour charts, the USDJPY is near a key trendline, with sellers defending it to target a return to 140.00, while buyers aim for a break towards 151.00. The 1-hour chart shows minor bullish momentum. Buyers lean on the trendline for new highs, while sellers seek a break to lower levels. The current trading session’s average range is marked.
What we’ve seen unfold so far can best be understood by examining how sentiment has shifted in tandem with both central bank tones and cross-border negotiations. With the USDJPY hovering near a tested trendline, attention naturally turns to whether this level will once again hold or finally give way. Price action has brushed off previous declines, bouncing in line with stronger demand for the dollar, following renewed optimism around a potential trade accord.
Sterling’s influence came via its impact on expectations linked to a new tariff framework, which, at a base rate of 10%, might stir tensions with European counterparts. While this tariff figure anchors the discussion for now, it’s likely to prompt recalibration in other trade-related flows and, as a result, drive currency fluctuations in pairs involving the greenback.
Powell’s position on the Federal Reserve trajectory has been a pullback from earlier dovish inclinations. In practical terms, the market had priced in over 80 basis points of cuts; that has now been scaled back to under 70 basis points. The effect has been fairly straightforward in FX markets—reduced rate cut expectations generally support the dollar, and that’s exactly what we’ve observed here.
The Japanese Yen as a Protective Asset
On the other hand, the Japanese Yen has retained its role as a protective asset. When risk flares, we often see flows into the Yen and its close counterpart, the Swiss Franc. The Bank of Japan has chosen to sit tight for now, with officials indicating interest rate increases could materialise if trade negotiations work out favourably. However, there’s still hesitation. The bank is clearly unwilling to act without concrete progress, suggesting policy shifts could take longer to emerge than previously thought.
Technically, USDJPY has crept up to a familiar resistance line. In recent trading, sellers marked their territory here, determined to push price back toward 140.00—this level remains a sensible target for short positions, given how tough it’s been to break this ceiling convincingly. We’ve also seen price action hugging the underside of the trendline on intraday charts, making aggressive breaks higher less reliable unless they’re backed by volume and a clear macro catalyst.
Meanwhile, the hourly movement suggests there’s modest upward momentum, though not enough yet to outpace resistance. From our standpoint, any push through the trendline needs to be met with quick follow-through if it’s to be sustained. Buyers continue to treat the trendline as a launchpad; however, with sellers active and nearby, it may be unwise to press too heavily without confirmation.
If you’re tracking this pair, focus on well-defined levels. Price remains well within expected daily ranges, and we’ve found that quick shifts in expectations—particularly around central bank forward guidance—are where opportunity lies. Reacting to those adjustments quickly can give a vital edge, especially for traders operating on shorter timeframes.
Discipline remains key. The technical pattern is clear, but the macro triggers behind the moves are what give those patterns meaning. Any surprise shifts in yield expectations, particularly from Washington, could tip the bias quickly. We intend to stay vigilant.
