USDJPY is on the rise as trade tensions continue, largely due to tariffs imposed by President Trump on Japanese goods. Effective August 1, there is a 25% tariff on all imports from Japan, along with additional tariffs on automobiles and auto parts starting in March 2025. By June 2025, there will also be 50% tariffs on steel and aluminum imports. Looking at the technical side, USDJPY shows a positive trend. The price has risen above the 38.2% retracement level of 147.135, measured from the 2025 high to low. The hourly chart shows the price finding support at this level, indicating that buyers are active at important technical points. Last week, the price engaged with the rising 100-hour moving average during two drops, and buyers stepped in to halt any declines, reinforcing this moving average as a crucial support area.

The Bullish Outlook

Staying above these key technical levels, like moving averages and retracement points, boosts the bullish outlook. These levels serve as important decision points where buyers typically re-enter the market to maintain the upward trend. In simple terms, the yen is losing value compared to the dollar. Traders are anticipating higher risks of inflation in Japan due to tariffs and an overall stronger dollar. The recent U.S. policy changes targeting Japanese exports have increased pressure on the yen while driving up demand for the dollar. The market charts illustrate this sentiment. The movement above the 38.2% retracement offers strong confirmation that buyers are confident in this area. The steady support around the 100-hour moving average, even through minor sell-offs, shows that demand remains strong. These dips haven’t changed the overall trend; instead, they signal increased market engagement. To act on this, there are a few practical steps we can take. As long as support holds at these retracement levels and moving averages, there’s potential for further upside. We should treat these levels as critical turning points—places where interest has previously stopped declines. If buyers don’t show up at these spots in the coming days, it would signal a possible change in market structure.

Approach For Tracking Movements

As a group, our focus shouldn’t just be on following the major trend, but also on having a plan for when momentum shifts. If we see buyers retreat—like if the price dips below the 100-hour average without recovering—we should reconsider our position. It’s essential to be prepared for this actively rather than just watching. For now, the respect for these technical markers provides a clear framework for action. It’s also important to remember that when tariffs are announced over several months, markets may not respond immediately. The staggered implementation—starting in August and continuing into March and June of next year—means reactions might stretch over time rather than being instant. This timeline allows for adjustments as more information comes in. Paying attention to the dollar side of the pair is just as crucial. Any changes in U.S. interest rate expectations due to these policies—especially if economic data suggests fewer or delayed cuts—could increase upward pressure on USDJPY. Recent market behavior indicates that macroeconomic developments are being considered alongside technical data. This combination of macro and technical analysis tends to yield the clearest signals for action. Moving forward, the best strategy is to treat key levels as clear indicators—deciding if the price will hold or break through these points. Whether we keep our leverage or reduce our exposure will depend on how these levels perform in the coming week. It’s also worth noting that movements in other yen pairs suggest broader market trends are aligning. As we continue to monitor each hourly candle and daily close, the market pattern becomes easier to follow. We should maintain our strategy as long as the structure remains intact and react swiftly if it changes. That’s our objective path from here. Create your live VT Markets account and start trading now.

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