During the Asian trading session, the US dollar rebounded slightly against the Japanese yen amidst a downward trend and is currently trading around 143.55. Previously, due to the uncertain outlook for the US economy and intensified trade concerns, the overall weakening of the US dollar has driven investors to turn to the safe haven currency, the Japanese yen.

President Trump announced on Wednesday a temporary suspension of new tariffs on multiple countries, but at the same time raised tariffs on Asian countries from 104% to 125%, sparking concerns in the market about escalating trade tensions.

The risk of economic recession is increasing globally and in the United States, and the uncertainty of tariff policies is one of the driving forces

Against this backdrop, investors are beginning to bet that the Federal Reserve will restart its interest rate cut cycle in June. According to data from the CME FedWatch tool, the market currently expects the probability of the Federal Reserve cutting interest rates at its May 6-7 meeting to soar from 14% a week ago to 44%.

In contrast, the hawkish stance of the Bank of Japan has injected additional support into the yen. The market generally believes that the Bank of Japan may still maintain a tight or at least not rush to loosen monetary policy in the future, which is in stark contrast to the expectation of a significant interest rate cut by the Federal Reserve.

Japanese Finance Minister Katsuyuki Kato said on Friday morning, "The foreign exchange rate should be determined by the market, but excessive fluctuations will have a negative impact on the Japanese economy

The market interpretation of this statement suggests that Japan may be prepared to deal with the economic impact of the rapid appreciation of the yen, but it also implies that the current strength of the yen is not intentionally guided by Japan, but rather due to the natural flow of global safe haven funds.

From a technical perspective, the support level for the US dollar against the Japanese yen is currently at the 143.00 level. If it falls below this level, it will further open up downward space. Due to the triple pressure of safe haven demand outflow, lower expectations for US interest rates, and fluctuating trade policies, the US dollar may continue to be under pressure against the Japanese yen in the short term.

Editor's viewpoint:

The current strength of the Japanese yen is not accidental, but a collective reassessment by global investors of the outlook for US policies, economic health, and the US dollar credit system. If the Federal Reserve confirms the start of the interest rate cut cycle and Japan maintains a hawkish tone, the US dollar against the Japanese yen may experience a structural correction.

Short term domestic demand focuses on whether the 143.00 level is stable and the actual actions of the Federal Reserve's May meeting.