Affected by US President Trump's comprehensive imposition of equivalent tariffs, global investors are seeking safe haven, and the Japanese yen saw aggressive buying during Thursday's Asian trading session. Investors are increasingly concerned that this move may reshape the global trading system, have a negative impact on the world economy, and bring shockwaves to global financial markets. This, coupled with the general weakness of the US dollar, dragged the US Japan currency pair to a low point of over three weeks.

At the same time, investors now seem convinced that the Bank of Japan will further raise interest rates as inflation continues to widen in Japan. This creates a huge divergence from the expectation that the Federal Reserve will soon resume its interest rate cut cycle amidst the tariff driven slowdown in the US economy, which will further narrow the interest rate differential between Japan and the US, supporting the prospect of further appreciation of the low-income yen.

From a technical perspective, the intraday drop below the 100 period simple moving average (SMA) on the 4-hour chart is based on the recent breakthrough in the upward channel of several weeks. This, along with the bearish oscillation indicators on the daily chart, supports the prospect of further depreciation of the USD/JPY in the near future. Therefore, a subsequent drop to the 147.00 level, towards the 146.55-146.50 area, or to the multi month low reached in March, seems very likely.

On the other hand, any attempt at recovery may now encounter obstacles near the 148.00 level, but sustained volatility may trigger short covering and rebound to the 148.65-148.70 area. That is to say, further upward movement may attract new sellers near the 149.00 level and limit the US Japan currency pair near the 100 SMA in the 149.35-149.40 area or 4-hour chart. The latter should be a crucial turning point, and if cleared, it may eliminate the negative outlook and pave the way for further gains.