USD/JPY is rising, crossing 147.00, due to yield differences between the US and Japan along with possible 25% tariffs on Japanese imports starting August 1. The pair is currently trading above 147.00, approaching the important level of 148.00. The US Federal Reserve keeps its interest rates at 4.25% to 4.50% to target 2% inflation, while Japan’s rate remains at 0.50%. This interest rate gap has strengthened the US Dollar against the Yen, especially as Japan aims to avoid those tariffs on its exports to the US.

USD/JPY Resistance Level

USD/JPY faces important resistance at 147.00, while maintaining a bullish trend above key moving averages. A daily close above this point could lead to a rise towards the Fibonacci level of 149.38, with the Relative Strength Index (RSI) suggesting potential further growth. Several factors influence the Yen, including the Bank of Japan’s (BoJ) policy, the difference in bond yields between the US and Japan, and overall market sentiment. Historically, the BoJ’s loose monetary policy has led to Yen depreciation, while its status as a safe-haven asset strengthens it during times of global market stress. The article includes a disclaimer stating that the opinions expressed are those of the author and do not constitute recommendations or guaranteed information. It’s advised that readers conduct their own research before making investment decisions. Recently, USD/JPY’s consistent rise above 147.00 shows that yield spreads are driving this trend. With US rates significantly higher than Japan’s, and no clear indication of policy changes from Tokyo, funds continue flowing into Dollar-denominated assets. The potential tariffs in Washington reinforce this trend, as businesses might ramp up exports, boosting short-term demand for USD, or brace for higher future costs, both exerting upward pressure on the pair.

Japanese Monetary Policy And Global Risks

Staying above 147.00 opens the door for further gains. The pair has repeatedly tested this area, and the psychological level of 148.00 could become a short-term target if daily closes remain strong. Momentum indicators like the RSI, while nearing stretched levels, have not yet shown signs of exhaustion, suggesting that any quick price drop may attract eager buyers if demand continues. On the Japanese side, the central bank’s commitment to a near-zero interest rate keeps the Yen weak. Without a shift toward tightening, the currency is vulnerable each time US economic data exceeds expectations. Bond traders have already reacted to this divergence, raising US 10-year yields significantly compared to Japanese Government Bonds (JGBs). So far, Tokyo has not changed its stance, and without another monetary shift, such as an unexpected adjustment in the BoJ’s yield curve control, this imbalance is likely to remain. The overall market backdrop is also crucial. The Yen’s defensive nature is less appealing in a risk-seeking environment. As long as volatility remains low and equity markets don’t panic, there will be fewer buyers looking for a safe haven in the Yen. Unless geopolitical tensions rise sharply or equity markets face severe downturns, demand for safe-haven assets will likely remain low. We could see more movements soon, especially if US inflation or jobs data exceed forecasts. Traders focused on interest rates are expected to remain agile as these data releases approach. Instruments tracking USD/JPY volatility show that the market isn’t preparing for sudden breakdowns at this time, which suggests that long-term options might still be underestimating potential changes, particularly around the Jackson Hole meeting or the August tariff deadline. This provides opportunities for traders interested in hedging their spot or structured asset exposure. Since mid-June, buyers have held the upper hand. Charts confirm this, and volumes reflect this trend. The macro outlook also supports buying. However, with 149.00 in sight and technical traders focusing on that Fibonacci retracement area, interest will rise with every daily close that is higher. There are rarely straight lines in trading, but current conditions still favor buying on dips—unless that changes, pursuing downside risks could become costly. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now