Recently, with Trump announcing temporary exemptions from tariffs on the electronics and automotive industries, global market sentiment has been boosted, leading to a marginal weakening of safe haven demand and suppressing the rise of the yen in the short term.

However, the escalating global trade tensions and optimistic market sentiment towards the US Japan trade agreement have provided solid support for the yen.

Although the demand for safe haven has decreased, the market's expectation of a trade agreement between Japan and the United States may further strengthen the yen. "- According to market research

Currently, the Bank of Japan (BoJ) is expected to continue raising interest rates in the coming months, driven by inflation and wage growth. As for the Federal Reserve, due to concerns about economic recession caused by Trump's tariff policies, the market generally expects at least three interest rate cuts by 2025, with a total magnitude of about 90 basis points.

This has led to the end of the widening cycle of interest rate differentials between the United States and Japan, and policy divergence is gradually shifting towards favoring the yen.

The direction of monetary policy between Japan and the United States is gradually diverging, and once the downward trend of the real yield of the US dollar is established, it will be the core driving force for the sustained appreciation of the Japanese yen. "- According to market research

Trump's trade policy remains highly uncertain, further increasing market volatility

Although Trump announced the temporary suspension of tariffs on some consumer electronics and automotive industries, giving a 90 day grace period, he also stated that he will implement a new round of tax increases on semiconductors and pharmaceuticals next week, and maintain tariffs of up to 145% on goods from Asian countries. This repeated policy attitude has intensified investors' concerns about the prospects of the US economy.

The duality of Trump's policies is gradually weakening the safe haven currency attribute of the US dollar, and the market is re evaluating the effectiveness of the US dollar as a 'safe haven anchor'. "- According to market research

From a technical perspective, the US dollar/Japanese yen is currently constrained by resistance of 144.00, which is an overnight high. If the exchange rate breaks through this level, it is expected to explore the resistance in the 144.45-144.50 range and further challenge the psychological level of 145.00, even extending to the 145.50-146.00 range.

But if it falls below the 142.00 level, it may trigger further decline.

Short term monitoring of the US manufacturing index to assess the current resilience of the US economy. But the real focus of the market will be the speech by Federal Reserve Chairman Powell on Wednesday, from which investors will search for clues on the direction of future monetary policy, especially whether the Fed will take earlier interest rate cuts in the context of intensifying global trade tensions.

Editor's viewpoint:

Currently, the USD/JPY is in a resonance zone between macro fundamentals being bearish and technical structure weakening. Policy divergence, expectations of economic slowdown, and optimistic sentiment towards US Japan negotiations are collectively driving capital inflows into the yen.

Once the key support of 142 is confirmed to have fallen below, it will open up greater downward space, and the possibility of testing the 140 level will significantly increase. But until the Federal Reserve makes a clear statement, exchange rate volatility may remain high, and close attention should be paid to the Fed's statements and subsequent progress in tariff policies.