Yen Under Pressure: Threat of New Tariffs from the US
The Japanese yen has come under pressure following reports of a potential reinstatement of trade tariffs by the United States. The USD/JPY and GBP/JPY currency pairs are exhibiting strong upward momentum as market participants assess the possible implications of Washington’s escalating trade rhetoric for the Japanese currency.
According to reports on Truth Social, Donald Trump has sent official letters to the leaders of Japan, South Korea, Malaysia, and several other countries, signalling the possible introduction of new tariffs from 1 August. In a letter to Japanese Prime Minister Shigeru Ishiba, Trump stated: “Please understand that these tariffs are necessary to correct the many years of Japan’s tariff, and non‑tariff, and trade barriers, causing unsustainable trade deficits against the United States.”
Such statements have heightened investor concerns over a renewed round of trade wars, which has negatively impacted demand for the yen.
Today, market participants remain focused on the release of the FOMC minutes and US consumer confidence data. These events may provide further impetus for the US dollar; however, geopolitical factors remain in focus.
USD/JPY
The USD/JPY pair has risen to 147.00, following the confirmation of a bullish harami pattern on the daily timeframe dated 2 July. If current conditions persist, the yen may continue to weaken, particularly if Tokyo does not adopt a firm retaliatory stance. Technical analysis of USD/JPY indicates the potential for a test of key resistance at 148.00–148.60. A downward correction may occur if the pair falls and consolidates below 146.00.
Key events that may influence USD/JPY movements:
- Today at 17:30 (GMT+3): US crude oil inventories
- Today at 20:00 (GMT+3): GDPNow estimate from the Federal Reserve Bank of Atlanta
- Today at 21:00 (GMT+3): Release of FOMC meeting minutes
GBP/JPY
The GBP/JPY pair is trading near the psychological resistance level of 200.00, supported by expectations ahead of today’s Bank of England Financial Stability Report and the publication of the Financial Policy Committee meeting minutes. Technical analysis suggests the potential for further growth towards the 200.00–202.60 range. However, if macroeconomic data disappoints, a downward retracement to the 198.40–199.00 area is possible.
Key events that can influence GBP/JPY pricing:
- Today at 09:00 (GMT+3): Bank of England Financial Stability Report
- Today at 12:30 (GMT+3): Financial Policy Committee Meeting Minutes
- Tomorrow at 20:30 (GMT+3): Speech by FPC member Sarah Breeden
