The USD/JPY pair remains under pressure as the Japanese Yen (JPY) shows uncertainty due to rising risk appetite and tariff concerns. US President Donald Trump hinted at possible tariffs on Japan, adding uncertainty to the trade outlook. Meanwhile, US bond yields rebounded, supporting the US Dollar and reducing demand for the safe-haven JPY. However, traders anticipate further rate hikes by the Bank of Japan (BoJ).
The narrowing US-Japan yield differential limits the USD/JPY upside. The Bank of Japan’s hawkish stance has pushed Japanese government bond (JGB) yields to their highest levels since June 2009. BoJ Deputy Governor Shinichi Uchida stated that the central bank will adjust its policy further if the economic outlook supports it. In contrast, US Treasury bond yields have fallen for six weeks. Markets fear that Trump’s trade policies could slow US growth. The weak US private sector employment data of 77K vs. 141K expected adds to these concerns. Declining consumer confidence also reinforces expectations for Federal Reserve rate cuts in 2025. This shift weakens the US Dollar and pressures the USD/JPY.
Despite these pressures, USD/JPY lacks strong bearish momentum. The US Dollar Index continues its weekly downtrend, hitting its lowest since November 6. However, US service sector activity showed unexpected strength, offering support to the US Dollar. Investors are waiting for the US Weekly Jobless Claims for short-term direction, while Friday’s US Nonfarm Payrolls report remains the key event for broader market sentiment.
USD/JPY Technical Analysis – Consolidations
USD/JPY shows negative price action due to strong bearish pressure from the weaker US Dollar. However, the pair failed to break the long-term support at 148.60 and remains within the descending channel. A break below this level will introduce further downsides to the pair. On the other hand, a break above $152 could trigger an upside move.
