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- USD/JPY trades around 148.00, up nearly 2%, as the US-China tariff truce boosts risk appetite.
- The US and China agreed to a 90-day tariff reduction, with the US cutting duties to 30% and China to 10%, supporting the US Dollar.
- Key support levels are 146.45, 146.29, and 145.69, while resistance sits at 149.56, 149.62, and 150.37.
The USD/JPY pair is currently trading in the vicinity of 148.00, reflecting an increase of approximately 2% on the day. This upward movement is largely attributed to the prevailing risk-on sentiment across global financial markets, spurred by a significant development in trade relations between the United States and China. Over the preceding weekend, the world’s two largest economies reached an agreement on a 90-day tariff reduction. As part of this accord, the United States will reduce its tariffs on imports from China to 30% (previously at 145%), while China will lower its duties to 10% (down from 125%). This temporary de-escalation of trade tensions has triggered a rally in riskier assets, consequently exerting downward pressure on traditional safe-haven currencies such as the Japanese yen.
The US Dollar has experienced a notable surge in response to the announced trade truce, further bolstered by a sharp increase in US Treasury bond yields. The benchmark 10-year US Treasury yield has ascended to 4.45%, indicating diminished expectations for near-term Federal Reserve rate cuts. Concurrently, the US Dollar Index (DXY), a measure of the dollar’s value against a basket of six major currencies, has gained over 1.25% to reach 101.74, marking its highest level in the past month and adding to the pressure on the yen. Federal Reserve Governor Adriana Kugler commented that while the tariff reduction represents a constructive step, the long-term implications for global supply chains remain uncertain. This uncertainty complicates the Federal Reserve’s ongoing assessment of the underlying strength of the US economy and its future monetary policy decisions. Market analysts are closely watching upcoming inflation data and Fed speeches for further clues on the central bank’s outlook.
On the Japanese economic front, recent data indicates that Japan’s current account surplus for March amounted to JPY 2.723 trillion, surpassing the anticipated JPY 2.465 trillion. However, Japanese investors were net sellers of foreign bonds during March, reducing their exposure to overseas assets amidst the prevailing volatility in global markets. This trend underscores the cautious sentiment among Japanese institutional investors, despite the positive developments in US-China trade relations. This capital outflow may be contributing to the yen’s weakness.
Technical Analysis
The USD/JPY pair is currently exhibiting a bullish signal, trading around the 148.00 level with gains of approximately 2% for the day, positioning it near the upper boundary of its daily trading range (145.69 – 148.65). The Relative Strength Index (RSI) is currently positioned in the 60s, suggesting neutral market conditions, while the Moving Average Convergence Divergence (MACD) indicator is signaling buy momentum. Further confirming the neutral momentum, the Bull Bear Power indicator is trading around 5, the Awesome Oscillator also indicates neutral conditions, and the Ultimate Oscillator (7, 14, 28) is residing in the 60s.
The 20-day Simple Moving Average (SMA) is currently providing support for the buy signal, while the 100-day and 200-day SMAs are suggesting selling pressure, reflecting a mixed long-term outlook for the currency pair. Both the 10-day Exponential Moving Average (EMA) and the 10-day SMA are hovering in the 140s, aligning with the overall bullish sentiment observed in the market.
Key support levels for the USD/JPY pair are identified around 146.45, 146.29, and 145.69, while resistance levels are situated around 149.56, 149.62, and 150.37. A decisive break above the 149.60 level could potentially signal further upside momentum for the pair, while a decline below the 146.30 level may open the door for a more substantial correction. Traders are advised to monitor these levels closely for potential trading opportunities.
Daily Chart
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