USD/JPY in the black as investors eye geopolitical flare-up

USD/JPY rose to 154.91 on Tuesday. The yen surrendered the previous session's gains, while the dollar found support despite uncertainty over US trade policy.

Over the weekend, President Donald Trump announced his intention to raise global tariffs from 10% to 15%, following a Supreme Court decision that overturned his "reciprocal" duties. He also warned of tougher measures against countries that "play games" with existing trade agreements.

Tokyo urged Washington to ensure that the court's decision does not harm Japanese companies and reaffirmed its commitment to the existing trade agreement with the US.

At the same time, Japanese media reported that US authorities held consultations last month on exchange rate policy to support the yen and are prepared to coordinate possible intervention at Japan's request. The initiative was overseen by US Treasury Secretary Scott Bessent amid concerns that political uncertainty ahead of Japan's general election could heighten market volatility.

Technical analysis

On the H4 USD/JPY chart, the pair has formed a consolidation range around 154.00. It has now broken out to the upside, opening the way for a move towards 155.75. After reaching this level, a decline towards 151.80 is likely. Technically, this scenario is confirmed by the MACD indicator, with its signal line holding above the zero level while turning clearly downward.

On the H1 USD/JPY chart, the pair has broken above 154.80 and is forming an upward wave structure targeting 155.75. Thereafter, a pullback to 154.70 cannot be ruled out. This scenario is confirmed by the Stochastic oscillator, with its signal line positioned above the 80 level and continuing to point firmly upward.

Conclusion

In summary, USD/JPY has resumed its upward momentum, breaking above recent consolidation as the dollar finds support despite escalating trade policy uncertainty. The market is weighing Trump's aggressive tariff stance against signals that US authorities stand ready to support the yen if necessary.

Technically, the pair has cleared near-term resistance and is targeting 155.75, with indicators suggesting further short-term upside potential. However, the broader outlook remains clouded by geopolitical risks and the possibility of coordinated intervention should the yen weaken excessively. A sustained move above 155.75 would open the way towards 157.00, while a reversal below 154.70 could signal a return to range-bound trading.