- The USD/JPY faces pressure due to the weakness of the US dollar while commercial conversations remain in the center of attention.
- Japan enters its eighth round of negotiations with US officials before the deadline of August 1.
- The USD/JPY falls below 147.00 while impulse indicators indicate a weakening of the bullish impulse.
The Japanese Yen (JPY) is extending profits against the US dollar (USD) on Tuesday. Investors are closely monitoring high -level commercial conversations between the US and Japan and evaluating recent developments in Japan’s internal policy.
The USD/JPY is negotiating below 147.00 at the time of writing, with the markets focused on the result of the ongoing tariff negotiations in Washington.
Commercial conversations between the US and Japan enter a critical stage before the tariff deadline
The chief negotiator of Japan, Ryosei Akazawa, is in Washington this week. He is meeting with Treasury Secretary Scott Besent, Commerce Secretary Howard Lutnick and US commercial representative Jamieson Greer.
This is the eighth round of conversations between the two countries. Akazawa is pressing heavily to reach an agreement before August 1, when the next tariff review cycle begins.
The US is threatening to extend its 25% tariff on cars to a wider range of Japanese exports. Tariffs already in force include 50% on steel and aluminum. The discussions now cover additional sectors, such as semiconductors and pharmaceutical products, with a 25%general tariff.
Japan wants specific exemptions by sector and a gradual reduction of cars tariffs. American officials say that any flexibility of commercial terms would require concessions in digital services and agriculture.
Political uncertainty in Japan is temporarily overshadowed by the weakness of the US dollar
Yen won modestly on Monday after a better result than expected in the elections of the upper house of Japan. Prime Minister Ishiba, of the Democratic Liberal Party (LDP), lost its majority for three seats, but it is likely to remain in power with the support of smaller parties.
The markets welcomed the result. He suggested that a low tax opposition platform would be avoided, and Istiba would continue to lead trade negotiations.
Even so, the loss has weakened its position. A narrower margin could hinder the approval of economic reforms, especially if US demands increase or conversations are broken.
Additional political uncertainty can keep USD/JPY backed, particularly if the flows towards Yen as a safe refuge decrease.
The USD/JPY falls below 147.00 as the bullish impulse fades
From a technical point of view, the USD/JPY is currently being negotiated below the 38.2% of the fall from January to April, providing short -term resistance in 147.14.
The pair is now being negotiated around 146.78, showing signs of weakening of the impulse after a strong rebound earlier this month. With the psychological level of 146.00 emerging as the next support level, a downward movement could see bassists trying a new test of the simple mobile average (SMA) of 50 days in 145.17.
Meanwhile, a rebound and a clear permanence above the 10 -day SMA in 147.60 could pave the path to the psychological level of 148.00. Above that is the maximum of July 16, 149.19 and the Fibonacci level of 50% in 149.38.
USD/JPY DAILY GRAPH
With the relative force index (RSI) about 52 at the time of writing, the bullish impulse continues to fade, since the pair is negotiated near the neutral territory.
Tariffs – Frequently Questions
Although tariffs and taxes generate government income to finance public goods and services, they have several distinctions. Tariffs are paid in advance in the entrance port, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and companies, while tariffs are paid by importers.
There are two schools of thought among economists regarding the use of tariffs. While some argue that tariffs are necessary to protect national industries and address commercial imbalances, others see them as a harmful tool that could potentially increase long -term prices and bring to a harmful commercial war by promoting reciprocal tariffs.
During the election campaign for the presidential elections of November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy. In 2024, Mexico, China and Canada represented 42% of the total US imports in this period, Mexico stood out as the main exporter with 466.6 billion dollars, according to the US Census Office, therefore, Trump wants to focus on these three nations by imposing tariffs. It also plans to use the income generated through tariffs to reduce personal income taxes.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
