Yen Weakness Deepens as Dollar Strength ResurfacesThe Japanese Yen continues to struggle, extending its multi-session decline against the U.S. Dollar. This morning’s weakness followed disappointing Japanese trade data, with June’s surplus falling well short of expectations due to another sharp contraction in exports, particularly to China. This trend has renewed fears that Japan may be slipping into a technical recession, which has further undermined confidence in the Yen.
Beyond trade numbers, Japan’s macro landscape is becoming increasingly fragile. Real wages have declined, inflation is cooling, and the Bank of Japan’s path to normalizing policy now appears more uncertain. Adding to the pressure, political risk is also rising ahead of the upcoming Upper House election, leaving markets without a clear direction from fiscal leadership.
In contrast, the U.S. Dollar is enjoying a resurgence. Federal Reserve members, including Williams and Logan, hinted this week that rates could remain higher for longer, particularly as President Trump’s latest wave of tariffs adds to inflation concerns. The administration’s recent clarification that there are no plans to replace Fed Chair Jerome Powell has also calmed investor nerves, restoring faith in policy stability. The result: increased demand for the dollar at the Yen’s expense.
Technical Outlook:
• Current price: Just below 148.60 resistance
• Support: 147.90 and 147.50
• Breakout potential: A decisive move above 148.60 could open the door toward 149.60 and even test the psychological 150.00 mark—last seen in March.
• Indicators: Price is supported by the 100-hour EMA with positive oscillator alignment.
Momentum remains bullish unless support at 147.90 is breached.
Takeaway: Expect continued volatility as the Yen reacts to domestic data while USD remains supported by Fed hawkishness and trade tensions.
