The USD/JPY currency pair has jumped nearly 2%, trading around 148.00, as global markets pivot towards risk-on sentiment following a temporary tariff truce between the United States and China. This risk-friendly environment is weighing on safe-haven currencies, with the Japanese Yen losing ground against the strengthening US Dollar. This subject is carefully analyzed by the experts at Lesrouleaux in the piece.
US-China Trade Truce Sparks Rally in USD
The major catalyst behind the surge in USD/JPY is the recently announced 90-day tariff reduction agreement between Washington and Beijing. Under this truce, the US has lowered tariffs on Chinese goods from 145% to 30%, while China has cut duties on US imports from 125% to 10%. This move is widely interpreted as a strategic pause in the ongoing trade conflict, boosting investor confidence and encouraging a flight from safe havens into riskier assets.
As a result, the US Dollar has rallied across the board. The US Dollar Index (DXY) has climbed over 1.25%, reaching 101.74, its highest level in a month. This rise has been fueled not only by risk appetite but also by a jump in US Treasury yields—the 10-year benchmark yield has surged to 4.45%, reflecting diminished expectations of imminent Federal Reserve rate cuts.
Adding a layer of complexity, Fed Governor Adriana Kugler remarked that while the tariff reduction is a welcome short-term relief, its long-term implications on global supply chains remain unclear. This uncertainty may still affect the Fed’s monetary policy trajectory, particularly as it attempts to balance inflation control with economic stability.
Japanese Yen Struggles Amid Domestic and Global Headwinds
Despite the JPY’s traditional safe-haven status, it is losing traction as investors rotate into riskier assets. Recent Japanese data shows that the March current account surplus came in at JPY 2.723 trillion, exceeding expectations of JPY 2.465 trillion.
However, this positive figure has not supported the Yen due to capital outflows—Japanese investors have been net sellers of foreign bonds in March, reflecting continued caution and uncertainty in volatile global conditions.
This cautious sentiment among Japanese institutions reinforces the view that even with a robust surplus, the Yen lacks buying interest unless global risk sentiment turns sharply negative.
Technical Analysis: Bullish Momentum Building
From a technical perspective, USD/JPY is displaying bullish momentum:
- The pair is trading at 148.00, near the top of its daily range of 145.69 – 148.65, with an intraday gain of roughly 2%.
- The Relative Strength Index (RSI) is in the low 60s, indicating neutral-to-bullish conditions.
- The Moving Average Convergence Divergence (MACD) is signaling a buy, further supporting the case for upward continuation.
- The Bull Bear Power remains positive around 5, and the Awesome Oscillator reflects neutral conditions, confirming that the bullish bias is not overextended.
Additional confirmation comes from the Ultimate Oscillator (7, 14, 28), which also remains in the 60s—supporting the view of moderate bullish momentum without indicating overbought territory.
Moving Averages Overview:
- The 20-day Simple Moving Average (SMA) offers support for a continued upward trend.
- However, the 100-day and 200-day SMAs suggest resistance, indicating that longer-term sentiment may be more cautious.
- The 10-day Exponential Moving Average (EMA) and 10-day SMA both hover in the 140s, in line with the short-term bullish outlook.
Key Technical Levels to Watch
Support Levels: 146.45 / 146.29 / 145.69.
A break below 146.30 could trigger a bearish retracement, potentially opening the door to a deeper correction phase.
Resistance Levels: 149.56 / 149.62 / 150.37.
A move above 149.60 would represent a decisive breakout, possibly accelerating gains toward the psychological 150.00 handle and beyond.
Outlook and Risk Considerations
While the current risk-on mood and macroeconomic drivers support USD/JPY strength, traders should remain cautious. Much of the bullish price action is tied to market optimism over the temporary trade truce. Should tensions resume—or if inflation, rate hike expectations, or geopolitical risks shift—the JPY could quickly regain its safe-haven appeal.
Further developments from Federal Reserve commentary, Japanese bond flows, and US inflation data will be critical for confirming the sustainability of the current trend. Additionally, the Bank of Japan’s policy tone—especially regarding yield curve control (YCC) or potential interest rate adjustments—could introduce fresh volatility to the pair.
Conclusion
The USD/JPY pair’s surge to 148.00, up nearly 2% intraday, highlights the market’s pivot toward risk assets in response to the US-China tariff easing. The safe-haven Yen is under pressure as the US Dollar strength, backed by rising Treasury yields, bullish technicals, and stronger market sentiment, dominates.
Despite the short-term bullish setup, traders should keep a close eye on key resistance near 149.60 and monitor whether support around 146.30 holds. Any shift in risk appetite, central bank policies, or geopolitical developments could swiftly alter the current trajectory.
