Insights 
VT 
USD/JPY saw a decline, aligning with a downturn in the US dollar and US Treasury yields, reaching 142.55. The unexpected rise in the CPI data suggests continued discussions on BoJ’s policy normalisation.
Japanese trade negotiator Akazawa engaged in trade talks with US officials over the weekend, with more meetings planned later. Additionally, Prime Minister Ishiba and former President Trump discussed tariffs in a phone call, with potential for a face-to-face meeting.
Technical Analysis
USD/JPY remained bearish on a daily momentum scale, with RSI also declining. Support is noted at 142.40 and 142, while resistance is set at 144.40/60 and 145.80. There is an ongoing short position targeting a move towards 141, with a stop-loss at 151.
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The downward movement in USD/JPY mirrors broader developments in the dollar’s trajectory and Treasury yields, which took a dip alongside it. This was not entirely unexpected, though the weight of the CPI surprise has added a layer of pressure on monetary policymakers in Japan. The stronger-than-anticipated consumer prices suggest that any future guidance from the central bank may lean toward policy tightening or at the very least, reduced accommodative measures.
Akazawa’s involvement in bilateral trade talks with US counterparts further underlines the importance of maintaining stable economic channels at a time when policy signals are becoming more nuanced. The progression of these meetings, combined with Ishiba’s direct outreach to Trump regarding trade levies, signals attempts to reinforce trade relations that might serve as a buffer to financial uncertainty, particularly as exchange rate tensions mount.
Market Outlook
From a momentum perspective, the mood remains tilted to the downside. The current price structure supports that stance—daily technicals are weakening, momentum indicators such as the Relative Strength Index have slipped lower, and sellers are gradually regaining control beneath key thresholds. Based on where things stand, 142.40 becomes essential. A clear break here, followed soon after by a decisive move below 142.00, likely opens a path to 141.00—a level being pursued by those already positioned short with tight risk parameters.
On the other side, a jump beyond 144.40 would begin to question that bearish argument, particularly if momentum were to reverse. The higher range at 145.80, while not immediately in view, could come into play should risk appetite shift meaningfully or if fiscal or monetary headlines surprise. Bearish outcomes could be jeopardised were these upper boundaries exceeded—151 is already being used as a defensive level, serving both as a technical invalidation point and psychological barrier.
We interpret recent positioning cautiously. In an environment where macro factors are highly reactive—whether data-driven or geopolitically influenced—reacting too slowly to shifts may prove costly. For the next few weeks, the way action unfolds around 142.00 will be telling. Should downside pressures persist and show little resistance at 142.40, then further continuation lower should be expected.
We emphasise the need to respond dynamically, not statically. Market pricing now seems increasingly sensitive to both US inflation surprises and expectations surrounding Japanese monetary signals. Forward-looking strategies, therefore, must lean on both real-time technical signals as well as possible outcomes of upcoming trade dialogue.
