Japanese Yen Rebounds for 3rd Day as USD/JPY Drops Below 143.20

The Japanese Yen is back in play, up for the 3rd day in a row against the US Dollar. After dipping briefly on Tuesday morning, the Yen recovered as traders went back to safe-haven assets. Concerns about Trump’s unpredictable trade agenda and geopolitical tensions in Russia and the Middle East are keeping risk appetite in check, making the Yen more attractive.

On the monetary front, last week’s BoJ meeting was dovish, with downward revisions to growth and inflation forecasts. But markets still think the BoJ will tighten later this year if data holds. The broader macro backdrop still favors Yen upside as uncertainty lingers over the Fed’s next move.

Trump Trade Tactics Cloud Outlook

Trump’s tariff rhetoric added another layer of complexity. Over the weekend he floated a 100% tariff on all foreign-made films and hinted at more targeted measures. While markets welcomed signs of possible trade talks between the US and China, the uncertainty from Washington has many investors nervous. Meanwhile, multiple flashpoints abroad—from drone strikes in Moscow to missile threats in Israel—have also sparked demand for safer assets.

At the same time, mixed US data is doing little to support the Dollar. Monday’s ISM Services PMI showed moderate expansion, while labor market data has calmed recession fears. But with the FOMC meeting underway, traders are waiting for Chair Powell to provide clarity on the path forward for rates.

USD/JPY Technical Setup and Strategy

USD/JPY is at 143.21, below the ascending trendline that held since late April. The 50-period EMA at 143.90 is capping recent upside, reinforcing the bearish move. MACD is negative, indicating fading momentum.

Key levels to watch:

• Immediate Resistance: 143.60 and 143.90

• Immediate Support: 142.60

• Next Support: 141.95

Suggested Trade Setups:

• Sell below 143.20 with target 142.60 and stop loss at 143.90

• Buy above 144.00 targeting 145.00 with stop loss at 143.40

Overall, the bias is down unless 143.90 is taken out convincingly. For now, patience may be more valuable than prediction as markets wait for direction from the Fed.