The USDJPY pair is holding steady near 147.60 in Wednesday’s Asian session, recovering from its previous dip but struggling to gain clear upside momentum. The Dollar’s performance remains under pressure following a historic political move that shocked markets President Donald Trump’s removal of Federal Reserve Governor Lisa Cook.
This action, the first in the central bank’s 111-year history, has amplified concerns about political interference in US monetary policy. Traders fear that undermining the Fed’s independence could dent global trust in the Dollar and limit its appeal as a safe-haven asset.
Trump’s Growing Influence Over the Fed
With Cook’s seat now vacant, Trump has an opportunity to secure greater control over the seven-member Federal Reserve Board. He has already nominated White House economist Stephen Miran to a temporary seat, with hints that Miran could also fill Cook’s position permanently.
Reports also suggest David Malpass, the former World Bank president, is another contender. These moves signal Trump’s push for a more accommodative, growth-focused monetary policy a stance that could further weaken the Dollar if rate cuts become politically driven rather than data-driven.
Japanese Yen Gets a Political Boost
The Japanese Yen is finding support from rising confidence in domestic politics. A Yomiuri newspaper poll showed a 20% increase in approval ratings for Prime Minister Shigeru Ishiba, despite his ruling coalition losing its parliamentary majority in July.
This improvement in public sentiment reduces political uncertainty, strengthening the Yen’s safe-haven appeal and partially offsetting broader Dollar strength in global markets.
US-Japan Trade Talks in Focus
Attention is also shifting to bilateral trade negotiations. Japan’s chief trade negotiator, Akazawa, will return to the US on Thursday to discuss Japanese investment opportunities. Markets will watch for any developments that could impact trade flows and investment sentiment, which in turn may influence USDJPY volatility in the medium term.
Key Data to Watch
Traders are bracing for important Japanese data scheduled for Friday:
Tokyo CPI (Consumer Price Index) – A leading inflation indicator that could guide the Bank of Japan’s policy stance.
Retail Trade data – Offering insights into consumer demand and economic resilience.
Stronger-than-expected numbers could strengthen the Yen further, while weaker data may ease pressure on the currency.
Technical Outlook: Range-Bound Action
From a technical perspective, USDJPY remains range-bound:
Support is seen around 147.20. A break below this level could expose the pair to a drop toward 146.70.
Resistance lies near 148.20, a key level to watch for any potential bullish breakout.
Momentum indicators such as RSI remain neutral, suggesting consolidation will likely continue unless a strong catalyst emerges.
Market Outlook: Volatility Ahead
With US political uncertainty lingering and Japan’s key data releases around the corner, the pair is likely to see heightened intraday volatility. Traders should also monitor:
US GDP revisions and jobless claims later this week.
Any statements from Fed officials responding to political developments.
Signals from the Bank of Japan if inflation data indicates stronger price pressures.
Unless there’s a decisive shift in fundamentals, USDJPY is expected to remain trapped in a 147.20–148.20 range in the short term, with the risk skewed toward a modest Yen appreciation if safe-haven demand intensifies.
Conclusion
The USDJPY pair is steady but vulnerable, balancing Dollar weakness from political interference fears against Japan’s stable political climate and safe-haven demand for the Yen. Until US data or Fed policy clarity provides a stronger directional cue, traders should expect range-bound conditions with sharp, headline-driven swings.
