- The USD/JPY price analysis indicates resilience in the yen.
- Japan’s Ishiba said he would remain the Prime Minister despite losing the majority of seats in the Upper House.
- Trump has threatened a 25% tariff on Japan starting August 1.
The USD/JPY price analysis indicates resilience in the yen after Prime Minister Shigeru Ishiba announced he would remain in office despite losing Sunday’s election. At the same time, a decline in the dollar and Treasury yields amid tariff uncertainty has supported the yen.
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The yen soared on Monday after Ishiba said he would remain the Prime Minister despite losing the majority of seats in the Upper House. Ruling with no majority in the Upper or Lower House will be difficult for him. Passing policy changes will become trickier, making the outlook for Japan’s politics uncertain. However, at the moment, his confidence has boosted optimism.
However, there is uncertainty about trade talks between the US and Japan. Trump has threatened a 25% tariff on Japan starting August 1. If there is no deal by then, the export-reliant country could suffer from weaker demand. This would complicate the outlook for Bank of Japan rate hikes.
Meanwhile, the dollar was fragile as market participants lost hope for more trade deals. Meanwhile, the risk of a global trade war is escalating as countries prepare to respond to the imposition of higher tariffs. Such an outcome would further slow down the US economy, hurting the greenback.
USD/JPY key events today
Market participants will continue to weigh the impact of Japan’s election, as there are no key economic releases scheduled.
USD/JPY technical price analysis: Bears eye the 146.01 support in new downtrend
On the technical side, the USD/JPY price has broken below the 148.02 support to form new lows, further confirming the new downtrend. The price trades below the 30-SMA, with the RSI below 50, favoring a bearish bias.
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The new bias followed a double top at the 149.01 level, accompanied by a bearish RSI divergence. The pattern revealed weakness in the uptrend, allowing bears to push the price below the 30-SMA and the 148.02 support level.
After breaking below 148.02, the price pulled back to retest the level. If it bounces lower after the retest, it will form a lower low, suggesting a bearish trend. In that case, bears would target the 146.01 support level. A break below this level would solidify the bearish bias.
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