USD/JPY Faces Key Support as Sellers Capitalise on Trump’s Currency Remarks

Market Overview

The USD/JPY pair has come under renewed selling pressure following fresh currency-related comments from President Donald Trump, which added a new layer of uncertainty to the already fragile US-Japan trade relations. Historically, Trump’s public criticisms of Japanese currency practices and calls for a weaker dollar to support US exports have triggered increased volatility in the yen, prompting safe-haven flows into the Japanese currency.

At the same time, the Bank of Japan’s evolving monetary stance, coupled with expectations that Japan’s interest rates could rise further in 2025, continues to provide underlying support for the yen. Despite a slight contraction in corporate capital spending in Q4, the broader outlook for Japan’s economic recovery and policy normalisation remains intact.

Meanwhile, in the US, ongoing uncertainty surrounding tariffs on key trading partners, particularly Canada and Mexico, alongside potential export restrictions on China, has weighed on risk appetite, indirectly favouring the yen. Expectations of an eventual peak in Federal Reserve rates—combined with growing speculation of a 2025 rate cut cycle—could further narrow the US-Japan interest rate differential, enhancing the yen’s relative appeal.

Technical Analysis

On the daily chart, USD/JPY has maintained a persistent downtrend since mid-January, with sellers consistently driving the price lower within a well-defined descending channel. The latest leg of this decline has brought the pair down to a critical support zone at 148.561, where initial signs of buyer interest have emerged.

Momentum indicators, however, highlight a weakening bearish bias. The MACD histogram, while still in negative territory, has started to contract towards the zero line, indicating that bearish momentum may be slowing. Meanwhile, the RSI remains below 50, confirming that selling pressure remains dominant, though it lacks the intensity seen earlier in the trend.

Should sellers manage to breach the 148.561 support level with conviction, this would validate the continuation of the primary downtrend and expose the next key downside targets at 147.817, followed by 146.870 and ultimately 145.824.

Conversely, a successful defence of support by buyers could spark a corrective rebound, with initial upside resistance emerging at 149.607. A sustained break above this level would open the door for a potential recovery towards the psychologically significant 151.298 zone, which marks a key inflection point for the longer-term trend. Only a clear breach of 151.298 would fully invalidate the bearish outlook.

Key Technical Levels

• Resistance Levels: 149.607, 151.298
• Support Levels: 148.561, 147.817, 146.870, 145.824

Fundamental Drivers

In the near term, USD/JPY remains highly sensitive to political developments, particularly those related to US-Japan trade relations and global trade policy rhetoric. Trump’s renewed currency and tariff rhetoric has placed the spotlight back on Japan’s perceived currency management practices, raising the risk of heightened diplomatic friction between the two nations.

At the same time, traders are closely monitoring upcoming G7 and G20 meetings, where currency cooperation and trade imbalances will likely feature prominently on the agenda. Any formal criticism of Japan’s currency stance—or tacit endorsement of a weaker yen—could materially influence USD/JPY positioning.

On the monetary policy front, expectations for a Bank of Japan rate hike later in 2025, potentially raising rates to 0.75%, remains a structurally supportive factor for the yen. This contrasts with mounting speculation that the Federal Reserve could signal a pause or eventual easing cycle in the second half of the year, particularly if growth slows and inflation moderates. A narrowing US-Japan rate differential would exert downward pressure on USD/JPY, reinforcing the pair’s broader bearish trajectory.

Conclusion

USD/JPY is approaching a pivotal technical support at 148.561, with Trump’s currency remarks and evolving US-Japan policy dynamics adding to the downside risks, while any bounce remains limited unless buyers reclaim 149.607.

• share