USD/JPY slips toward 140.50 as Fed pressure builds

USD/JPY dives to the 140.50 region amid renewed political threats to Fed independence
Trump’s remarks intensify fears of institutional instability, weighing further on the US Dollar
Momentum signals remain bearish, with next key support eyed near 139.60

Patricio Martín FXStreet

The USD/JPY pair slumped on Monday during North American trading, falling sharply toward the 140.50 mark as the broader market reacted to escalating concerns surrounding the Federal Reserve’s independence. The Greenback extended its downtrend after US President Donald Trump reiterated his displeasure with Fed Chair Jerome Powell, accusing him of politically motivated rate adjustments in late 2024. The situation has sparked intense speculation over Powell’s future and raised doubts about the Fed's autonomy.

Meanwhile, the US Dollar Index (DXY) trades deep in the red, testing the 98.50 zone for the first time in three years. Amid this backdrop, demand for the Japanese Yen has strengthened. Investors are seeking safer assets as global uncertainty grows and confidence in US monetary leadership deteriorates. Despite Trump’s 90-day pause on new reciprocal tariffs, the absence of a clear trade policy path continues to unsettle markets.

On the technical front, USD/JPY is flashing a bearish signal. Price action collapsed through the prior week’s low at 141.64 and now targets the June 2023 trough near 139.60. The 140.00 level remains a pivotal psychological support zone. A clean break below this threshold could expose downside risk toward the mid-130s in the medium term. Indicators support this outlook, with MACD printing bearish divergence and the RSI slipping into oversold territory. Key resistance levels are seen near 142.20, followed by 143.40 and 144.60.

Daily chart

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Patricio Martín

FXStreet

Patricio is an economist from Argentina passionate about global finance and understanding the daily movements of the markets.

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