Driven by a stronger dollar and outflows from yen safe-haven demand, USD/JPY extended gains for the fifth consecutive day, testing the key resistance level at 146.00. The U.S. International Trade Court recently ruled that several of former President Trump’s global trade tariffs are illegal, citing improper use of emergency powers as the legal basis for these tariffs. The ruling currently blocks implementation, with the White House appealing to the Supreme Court for a final decision.
Following the ruling, the dollar and U.S. stock futures surged sharply as the market’s concerns over tariffs slowing economic growth and fueling inflation appeared to ease. Meanwhile, the latest Federal Open Market Committee (FOMC) minutes reiterated a cautious stance on rate cuts due to tariff-induced uncertainties, supporting the dollar’s strength.
Despite the dollar’s advance weighing on the yen, expectations of two more Fed rate cuts this year versus a potential Bank of Japan rate hike may limit further upside for the pair. Tokyo’s core CPI data, expected to rise slightly from 3.4% to 3.5% later today, could reinforce hawkish bets on the BOJ.
USD/JPY bounced from support near 142.10 and broke above the 50-hour moving average, closing near 146.00. The daily chart shows a bullish engulfing pattern and RSI has crossed above 50, indicating buyer momentum. A break above 146.00 could target the May high of 148.65 and the 200-hour moving average around 149.45. Support lies at 145.00, the 50-hour MA, and 142.10; a break below the latter could signal a downtrend.
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