- Summary:
- USDJPY is under pressure with the dollar's upside limited by recession fears driven by US reciprocal tariffs, but the yen has its own troubles
The Japanese yen strengthened against the US dollar on Tuesday as traders repositioned themselves for US reciprocal tariffs. The USDJPY currency pair traded at 149.31 at the time of writing, down by 0.4% during the European trading session, registering the second loss in the last three sessions. For context, the pair only registered one loss in the previous four sessions.
The US dollar is under pressure as concerns mount that the incoming reciprocal tariffs, could trigger a recession in the US. The tariffs have roped in all nations, including America’s top allies, and leading trading partners. That has raised the prospect of realignments in the global trade ecosystem, potentially to the detriment of the US. For instance, Japan, China and South Korea are working on opening up trade among them, a factor that could threaten the dollar’s standing as the standard global trading currency.
On the other hand, Japan exported approximately $40.76 billion worth of vehicles to the US in 2024, and the incoming 25% tariffs on auto imports could put pressure on the yen.
The Japanese Government has initiated talks for exemption from the tariffs, which could badly hurt the country’s export-reliant economy. Japan’s exports to the United States totaled more than $140 billion in 2024, and the tariffs will limit dollar inflows into Japan and provide support to the USDJPY pair.
USDJPY Prediction
USDJPY pivot mark is at 149.67 and resistance at that level favours the sellers to be in control. The pair will likely find its initial support at 149.94. However, a stronger downward momentum will break below that level and potentially take the action lower to test 149.50.
On the other hand, the momentum will move towards the upside if the price reclaims 149.67 support. With the buyers in control, USDJPY will likely encounter primary resistance at 150.12. The downside narrative will be invalid if the price breaks above that level. Also, an extended upward momentum could push the pair higher to test 150.66.
