As market risk sentiment warms up, the safe haven currency Japanese yen experienced partial selling during the Asian session on Tuesday, pushing the US dollar against the Japanese yen (USD/JPY) back above 142.50. US Treasury Secretary Scott Besant said that many countries have put forward "very good" tariff proposals, boosting market expectations for trade easing.

This is a positive signal for the global market, especially helping to alleviate the previously heightened risk aversion caused by global trade frictions, "said Masafumi Yamamoto, senior strategist at Mizuho Bank.

However, despite the White House stating that it is in talks with Asian countries, the Asian side denies any substantive negotiations are underway, keeping the market cautious.

The Bank of Japan will announce its interest rate decision this Thursday. The market generally expects to maintain the current ultra loose policy unchanged, but considering the gradual spread of inflation in Japan and the significant salary increase in spring labor negotiations, analysts generally believe that there is still a possibility of further tightening by the Bank of Japan this year.

The current wage increase has reached a historic high, providing room for the normalization of monetary policy, "said Takeshi Minami, head of macro research at Nomura Securities.

However, the new round of tariffs imposed by the United States may cause a 0.5% decline in Japan's GDP, setting limits for the Bank of Japan to raise interest rates in the short term. This makes this week's monetary policy guidance and economic expectations updates the focus of market attention.

Compared to the cautious stance of the Bank of Japan, the Federal Reserve is facing greater easing pressure. The market currently expects the Federal Reserve to start a new round of interest rate cuts in June and accumulate at least 100 basis points of interest rate cuts by the end of 2025. This will narrow the spread between the US dollar and the Japanese yen, potentially supporting the trend of the Japanese yen.

In addition, the conflict between Russia-Ukraine conflict is still clinging. Russia suddenly announced that it would unilaterally implement a 72 hour ceasefire from May 8, but the Ukrainian side reacted coldly to this. Regional tensions still provide medium-term support for the safe haven currency, the yen.

From a technical perspective, the US dollar/Japanese yen is currently facing initial resistance at the level of 142.60-142.65. If it can break through, it is expected to test the 143.00 and 143.40-143.45 regions, further breaking may trigger short covering, push the price back above 144.00, and even confirm a temporary bottom.

But if it falls below the 142.00 level, it may become a bearish acceleration entry signal, targeting the 141.50 and 141.00 areas, and even testing the psychological support level of the previous low of 140.00. In the 4-hour chart, the price has not yet stabilized at the 100 period SMA moving average, and MACD and RSI are also showing a downward trend, indicating that the risk of a pullback has not yet been relieved.