USD/JPY climbs as Yen struggles amid trade tensions

On Friday, the USD/JPY pair advanced to 146.93, marking a three-week high as the US dollar continued to strengthen against a backdrop of escalating global trade tensions.

Recent developments in US trade policy have further unsettled markets. US President Donald Trump announced additional tariffs, including a 35% levy on Canadian imports, alongside plans for sweeping 15-20% duties on most other trading partners.

Of particular concern are US-Japan relations, following Trump’s imposition of a 25% tariff on Japanese goods this week, set to take effect on 1 August. The move has intensified bilateral strains, with Japanese Prime Minister Shigeru Ishiba warning of the need to reduce Japan’s reliance on the US in defence, food security, and energy.

Ishiba described the ongoing negotiations as a “battle for national interests”. At the same time, a leading Japanese think tank projected that the tariffs could shave 0.8% off Japan’s GDP in 2025, with a cumulative decline of 1.9% by 2029.

Technical analysis: USD/JPY

H4 Chart:

The USD/JPY has established a consolidation range around 145.65, now extending to 147.17. A short-term pullback to 145.65 (testing from above) is anticipated, followed by a potential upward wave targeting 147.47 at minimum. This outlook is supported by the MACD indicator, with its signal line firmly above zero and trending upward.

H1 Chart:

A consolidation phase near 146.41 preceded an upward breakout, completing a wave structure at 147.17. A downward correction towards 145.65 is now in view, corroborated by the Stochastic oscillator, where the signal line sits at 80 and points sharply downward.

Conclusion

The yen’s weakness persists amid dollar strength and trade uncertainties, with technical indicators suggesting near-term volatility. Traders should monitor 145.65 as a key support level, while further upside towards 147.47 remains plausible.