The USD/JPY pair experienced sharp volatility on Monday, with the yen rising to its highest level since September 2024. In the European session, the pair fell to 141.00, down 0.79%. Earlier, the yen reached 140.47, its strongest performance in five months.
Dollar Declines Amid Trump’s Pressure on Powell
The US dollar declined against most major currencies, including the yen. This decline came after comments from President Donald Trump’s chief economic advisor, indicating that the administration is considering firing Federal Reserve Chairman Jerome Powell. These comments raised investor concerns about the independence of the US central bank.
Trump has expressed dissatisfaction with Powell, accusing him of not cutting interest rates. Last week, Trump said, “Firing Powell can’t happen fast enough.” These statements came after Powell indicated that US tariffs could raise inflation, which could force the Federal Reserve to balance curbing inflation with supporting economic growth.
Powell refuses to resign and remains in office
Jerome Powell confirmed that he will not resign from his position, noting that the law does not allow the president to remove him without good cause. Powell, who was initially appointed by Trump in 2018 and reappointed by President Biden in 2022, is scheduled to remain in his position until May 2026. This conflict between Trump and Powell has raised questions about the president’s ability to influence the central bank’s policies.
Markets react to political tensions
These tensions have caused the US dollar to fall to multi-year lows against the euro, the Swiss franc, and the Japanese yen. Meanwhile, gold prices have risen to record highs as investors have fled to safe-haven assets amid political and economic uncertainty.
Technical Analysis of the USD/JPY Pair
An analysis from El País newspaper indicated that the dollar’s weakness is due to Trump’s threats to the independence of the Federal Reserve, in addition to aggressive trade policies that increase uncertainty and weaken confidence in US assets.
Technically, the USD/JPY pair broke the support level at 141.16. If the decline continues, the pair may find support at 140.14. On the other hand, resistance is at 142.62 and 143.64. Investors are closely monitoring these levels to determine the pair’s future direction.
Trade Tensions Add Further Pressure
In addition to the tensions between Trump and Powell, US trade policies have increased pressure on the markets. Trump imposed new tariffs on trading partners, raising fears of a global economic slowdown. These policies have negatively impacted investor confidence, prompting them to seek safe havens such as the Japanese yen and gold.
International Reactions to Trump’s Remarks
Trump’s remarks regarding the possibility of firing Powell have sparked international reactions. Analysts warned that this move could shake confidence in US institutions and negatively impact global markets. Meanwhile, Federal Reserve officials emphasized the importance of central bank independence and the need to base decisions on economic data, not political pressure.
The Japanese yen posted strong gains against the US dollar, driven by broad weakness in the greenback.
The yen rose 1% during today’s session, benefiting from negative movements in the dollar, especially as confidence in it continues to decline.
Despite this rise, Sean Osborne, chief currency strategist at Scotiabank, noted that the yen’s performance remains average compared to G10 currencies.
Conversely, the USD/JPY pair is showing signs of continued downward pressure. The pair has retreated to the 140.00 level, which is considered a critical technical support point.
Markets are in a state of intense anticipation ahead of a new round of trade negotiations between Japan and the United States.
Meanwhile, markets remain on high alert ahead of a new round of trade negotiations between Japan and the United States. This round is scheduled to begin on April 24 and could carry important signals regarding future economic relations. The discussions focus on customs issues, as well as cooperation in the fields of technology and energy. Therefore, these negotiations are expected to have a direct impact on the movement of the USD/JPY pair in the coming days.
Moreover, no major economic reports are expected from the United States this week. This absence of data increases markets’ reliance on political and trade events to determine the dollar’s direction. The lack of support from economic figures also weakens the dollar’s ability to regain momentum against major currencies.
In the same context, the US dollar witnessed a general decline against most major currencies, amid ongoing political pressure. Recent statements by the US administration regarding the future of Federal Reserve Chairman Jerome Powell have raised investor concerns. Traders feel that the central bank’s independence is being threatened, which negatively impacts confidence in the dollar.
In Japan, investors welcomed the relative strength of their currency, especially given the Bank of Japan’s focus on monetary policy stability. Although the Bank of Japan hasn’t made any significant changes recently, expectations point to a gradual shift in policy.
Some analysts believe that the continued weakness of the dollar could pave the way for potential Japanese interventions to control the yen’s movement.
Ultimately, the 140 level in the USD/JPY pair remains pivotal in market calculations. Future moves will depend on the outcome of the trade negotiations, political developments in Washington, and the dollar’s resilience. Until then, markets continue to monitor every word and every signal for the next direction.
