The USDJPY pair dropped below the 147.50 mark in Tuesday’s Asian session, sliding to around 147.30 as the US Dollar weakened under fresh political and trade-related pressures. The decline comes on the heels of President Donald Trump’s threats to remove Federal Reserve Governor Lisa Cook and impose additional tariffs and export controls on key sectors, sparking renewed volatility in forex markets.
Fed Independence Under Fire
The pressure on the greenback intensified after Trump posted a letter on social media announcing his intention to remove Fed Governor Lisa Cook from her position. This move, if executed, would allow Trump to appoint a replacement aligned with his economic agenda, raising investor concerns about the independence and credibility of the Federal Reserve.
Traders fear that a politicized Fed could lead to aggressive rate cuts or inconsistent policy moves, further unsettling currency markets.
Uncertainty around the Fed’s direction is likely to weigh on the USD in the near term, especially ahead of key economic data releases later this week.
Trade Tensions Escalate
Adding to the market jitters, Trump threatened to impose 200% tariffs on Chinese goods and restrict exports of advanced technologies and semiconductors.
These remarks followed Beijing’s tighter controls over rare earth mining, heightening fears of a potential tech supply chain war.
Such aggressive rhetoric typically drives investors toward safe-haven assets, benefiting the Japanese Yen in particular.
USDJPY Gains Support
On the domestic front, the Japanese Yen received a boost from improving political sentiment in Japan.
A Yomiuri newspaper poll reported a 20% increase in public approval for Prime Minister Shigeru Ishiba, despite his coalition losing its majority in July’s election.
Support for his cabinet rose to 39%, driven by a recently concluded US-Japan trade deal and a government initiative to increase rice production, signaling stability in domestic policy.
Market Outlook
The combination of political interference in US monetary policy, escalating trade tensions, and domestic stability in Japan has tilted the balance in favor of the Yen.
Analysts suggest that if Trump’s threats materialize, the USDJPY could test deeper support levels around 146.80 or even 146.50 in the short term.
On the upside, only a sustained recovery above 147.80 would signal renewed strength for the Dollar.
Key Takeaways
USDJPY slips below 147.50 amid Trump’s threats to remove Fed Governor Lisa Cook.
Market fears rise over Fed independence and potential aggressive policy changes.
Tariff and export control threats against China and tech sectors fuel risk-off sentiment.
Japanese political stability and improving public support for PM Ishiba boost the Yen.
USDJPY Technical Outlook – Bearish Bias
USDJPY maintains a bearish tone after slipping below the 147.50 level, now trading near 147.30. Immediate support lies at 147.00, followed by 146.80 and 146.50, levels that could attract buyers if the decline deepens. On the upside, resistance is seen at 147.50, with stronger barriers at 147.80 and 148.20. Momentum indicators show weakness, with the RSI softening toward neutral and the MACD signaling growing bearish pressure. Unless the pair recovers above 147.80, the short-term bias remains bearish, with risks tilted toward further downside.
Conclusion
The USDJPY latest dip underscores the market’s sensitivity to political risks and policy uncertainty. With Trump’s rhetoric fueling volatility and the Yen drawing strength from domestic stability, traders are expected to favor defensive positions in the short term. Upcoming US economic indicators and any follow-up actions from the White House will be critical in shaping the pair’s next directional move.
