USD/JPY operates with caution around 149.50 with Trump’s tariffs on the horizon

  • The USD/JPY remains on the edge around 149.50 before the announcement of Trump tariffs.
  • It is expected that Trump’s reciprocal tariffs lead to an economic deceleration in the US.
  • This week, investors will focus on the PMI of services of the US ISM and March NFP data.

The USD/JPY pavement quotes around 149.50 during negotiation hours in North America on Wednesday. The pair remains in suspense while investors expect the announcement of reciprocal tariffs planned by the president of the United States (USA), Donald Trump, at 20:00 GMT.

Before the Trump tariff plan, the US dollar index (DXY) is loudly traded around 104.00, assuming that the greatest levies will result in a global economic slowdown, including USA. Investors expect the impact of the highest import rights to fall on US importers. Such scenario would lead to a strong decrease in the purchasing power of households. Technically, the scenario of greater inflation and less demand for households led to stagflation, complicating the work of the Federal Reserve (Fed).

Fed officials have been guiding that interest rates should remain in the current range of 4.25% -4.50% longer until they evaluate how much Trump tariffs will impact on inflation and economic growth.

This week, investors will also focus on the Index of Purchasing Managers (PMI) of ISM services and non -agricultural payroll data (NFP) of March, which will be published on Thursday and Friday, respectively.

Meanwhile, the Japanese Yen (JPY) quotes down against other peers, since Trump’s policies could significantly impact Japan’s economic growth, since he is one of the main US commercial partners.

US dollar FAQS


The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.


The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.


In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.


The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.

Source: Fx Street

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