The USD/JPY pair remains under notable intraday pressure during Monday’s Asian trading hours, although it has managed to hold above the key psychological level of 154.00 and recover slightly toward the 154.35 zone. Despite this modest rebound, the pair is still down more than 0.45% on the day and retains a bearish tone, with downside risks lingering.
Market sentiment has deteriorated after Donald Trump announced a new 15% global levy following a recent ruling by the US Supreme Court against his broader tariff framework. The move has sparked fears of retaliatory trade measures and potential disruptions across global supply chains. As investors shift away from risk-sensitive assets, the safe-haven Japanese Yen has strengthened. At the same time, the US Dollar has weakened broadly, compounding the downward pressure on USD/JPY.
On the macro front, the US Personal Consumption Expenditures (PCE) Price Index released Friday showed core inflation rising more than expected in December. This reinforced expectations that the Federal Reserve will likely hold interest rates steady in March. However, markets continue to anticipate two quarter-point rate cuts later this year, especially after US GDP growth slowed sharply to an annualized 1.4% pace in the fourth quarter. These growth concerns have pulled the Dollar back from the nearly one-month high reached at the end of last week.
In Japan, economic data also presents a mixed outlook. Weak fourth-quarter GDP growth has increased pressure on Prime Minister Sanae Takaichi to introduce additional fiscal stimulus. Meanwhile, Japan’s preferred inflation measure cooled to its slowest rate in two years, reducing expectations that the Bank of Japan will tighten monetary policy anytime soon. This dynamic has limited further Yen appreciation and provided some support to USD/JPY.
Additionally, subdued liquidity conditions due to a Japanese bank holiday have restrained volatility. Given these offsetting forces—safe-haven demand for Yen versus expectations of continued accommodative Japanese policy—traders should remain cautious before committing to strong directional positions in USD/JPY.
Trade Idea:
Sell USD/JPY rallies toward 154.80–155.00 resistance, targeting 153.20, with stop above 155.40, as safe-haven Yen demand and softer US Dollar bias pair lower.