USDJPY climbs amid renewed US trade tension, steady US yields

• USD/JPY uptrend extends spurred by steady US 10-year Treasury yield holding at 4.58%.
• President Trump plans new tariffs on Chinese, European goods, spurring US Dollar recovery.
• Bank of Japan eyes rate hike with improving wage growth and inflation, softening Yen.

The USD/JPY rose in early trading during the North American session, bolstered by Trump’s trade rhetoric against Canada, Mexico, the EU, and China. In addition, a firm US Dollar and a steady US 10-year Treasury bond yield pushed the pair above the 156.00 figure for a 0.41% gain.

USD/JPY climbs above 156.00, shrugs off BoJ rate hike speculation

On Tuesday, Trump stated his team is discussing applying 10% tariffs on China’s goods on February 1 while vowing to apply duties on European goods are also eyed. Meanwhile, the Greenback recovered following Monday’s 1.22% fall, as Trump tempered his trade rhetoric in his inauguration speech.

In the meantime, the US Dollar Index (DXY), which tracks the buck's performance against a basket of six currencies, remains unchanged at 108.13. The US 10-year T-note is yielding 4.58%, flat.

The Japanese Yen remains slightly softer even though the Bank of Japan (BoJ) is expected to raise rates at the January 23-24 meeting. Governor Kazuo Ueda and Co. got a green light as Japanese retailers are increasing wages for the second year amid rising inflation and difficulties in hiring people.

Data-wise, the US economic docket remains absent. In Japan, the Balance of Trade in December is expected to reduce the deficit to ¥-55B from ¥-117.6B.

USD/JPY Price Analysis: Technical outlook

The USD/JPY recovered after hitting a weekly low of 154.76, shy of testing a four-month-old support trendline drawn from October’s 2024 lows of 139.56.

However, buyers stepped in and pushed the exchange rate past the 155.00 and 156.00 figures, as they target the Tenkan-sen at 156.82. A breach of the latter will expose a 157.00 figure, followed by the January 14 daily high at 158.20.

Conversely, if USD/JPY tumbles below 156.00, it would expose 155.00, followed by the January 21 swing low of 154.76.