Affected by concerns about a global economic recession triggered by Trump's significant increase in tariffs, market risk appetite has plummeted, and the Japanese yen, as a safe haven currency, has risen strongly.

The S&P 500 recorded its largest four-day decline since the 1950s. Funds flow out of risky assets and bond markets, and into low-risk assets such as cash and Japanese yen.

The Federal Reserve may cut interest rates 5 times this year, while the Bank of Japan may continue to raise interest rates:

BoJ Vice President Masakazu Uchida recently stated that if core inflation stabilizes near 2%, interest rates will continue to rise. The Federal Reserve's policy reversal has led to a narrowing of the US Japan interest rate differential, attracting capital back to Japan.

Trump maintains dialogue with Japanese Prime Minister Shigeru Ishiba on tariff issues, and the Japanese Ministry of Finance will hold an emergency meeting with the BoJ and financial regulatory agencies. Trump claims' good relations with Japan ', interpreted by the market as a potential prelude to a US Japan trade agreement.

Medium term support for the Japanese yen offsets some global trade concerns.

The current USD/JPY has fallen below the important level of 146.00: the annual low of 144.55 is the last defensive level for bulls.

If it falls below, it will further explore the support level around 143.30 (the low point in October 2024).

RSI has not yet hit oversold, indicating that there is still room for short-term downward movement. If it falls below 144.55, then look down at 144.00 or even 142.80.

In the next few trading days, the key to the trend of the Japanese yen depends on the following risk events:

FOMC meeting minutes (Wednesday evening): If biased towards doves, it may accelerate the depreciation of the US dollar;

US CPI/PPI data (Thursday, Friday): If inflation falls short of expectations, expectations of interest rate cuts will be strengthened, and the yen may strengthen again;

BoJ and Japanese Government Joint Meeting: Market Focus on Its Evaluation Position on Global Financial Markets and Japanese Yen Trends.

Editor's viewpoint:

The current strength of the Japanese yen is the result of a combination of risk aversion, policy spread convergence, and relatively stable geopolitical situation. In the short term, the USD/JPY still has upward potential. 144.55 is the key defense line, and if it falls below, bears will have full control of the situation. The medium-term strategy can focus on whether the expectations for the US Japan trade agreement are fulfilled and whether the BoJ will actually raise interest rates before the summer.