USD/JPY surges as risk appetite soars following a landmark US-China tariff reduction agreement, pushing the currency pair to multi-week highs near 148.00 with technical indicators suggesting further upside potential.
Contents
Key Highlights:
- USD/JPY jumps to the 148.00 level, gaining nearly 2% as risk sentiment improves.
- US-China 90-day tariff reduction agreement sparks global market rally.
- Dollar strength intensifies as the US 10-year Treasury yield climbs to 4.45%.
- Technical indicators point to potential further USD/JPY gains with key resistance at 150.37.
The USD/JPY surges dramatically today, climbing approximately 2% to trade near the 148.00 threshold as market sentiment shifts decisively toward risk-on assets. This significant USD/JPY climb follows the weekend announcement of a breakthrough in US-China trade negotiations, triggering widespread implications for global currency markets.
US-China Trade Deal Fuels USD/JPY Surge
The primary catalyst behind today’s USD/JPY surge is the newly negotiated 90-day tariff reduction agreement between the world’s two largest economies. Under this temporary arrangement, the United States has agreed to slash its tariffs on Chinese imports from 145% to 30%, while China reciprocates by cutting its duties from 125% to 10%.
This diplomatic breakthrough has immediately strengthened the US Dollar across major currency pairs, with the Dollar Index (DXY) climbing more than 1.25% to reach 101.74 – its highest point in a month. Simultaneously, the Japanese yen, traditionally viewed as a safe-haven currency during periods of market uncertainty, has experienced substantial selling pressure as investors pivot toward higher-yielding assets.
Bond Yields Support Dollar as USD/JPY Surges
The USD/JPY surge gains additional momentum from shifting interest rate expectations. The benchmark 10-year US Treasury yield has risen to 4.45%, reflecting market reassessment of the Federal Reserve’s monetary policy trajectory. Fed Governor Adriana Kugler acknowledged the positive aspects of the tariff reduction while emphasizing ongoing uncertainty regarding long-term global supply chain impacts.
“While the tariff reduction represents a positive development for international trade, we must carefully evaluate its broader implications for supply chains and inflation pressures,” Kugler noted in recent comments.
Japanese Economic Data Background
Despite Japan reporting a stronger-than-expected March current account surplus of JPY 2.723 trillion (exceeding forecasts of JPY 2.465 trillion), the yen continues to weaken against the dollar. Data also revealed Japanese investors as net sellers of foreign bonds in March, highlighting persistent caution among institutional investors despite improving global trade conditions.
Technical Analysis as USD/JPY Surges
From a technical perspective, the USD/JPY surge demonstrates significant bullish momentum. The pair now trades near the upper boundary of its daily range (145.69 – 148.65), with technical indicators providing mixed but generally positive signals:
- The Relative Strength Index (RSI) registers in the 60s, indicating neutral-to-bullish conditions
- Moving Average Convergence Divergence (MACD) displays positive buying momentum
- The 20-day Simple Moving Average (SMA) supports continued upside potential
- Longer-term indicators (100-day and 200-day SMAs) suggest caution on extended rallies
See more related articles: US China trade deal strategic split
Key Price Levels to Monitor
As the USD/JPY surges, traders should monitor these critical support and resistance zones:
Support levels: 146.45, 146.29, and 145.69.
Resistance levels: 149.56, 149.62, and 150.37.
Market technicians suggest a decisive break above 149.60 could accelerate the USD/JPY climb toward the psychologically significant 150.00 level and beyond. Conversely, failure to maintain positions above 146.30 might trigger a deeper correction.
Outlook for USD/JPY
With risk appetite improving across global markets and US yields maintaining upward pressure, the USD/JPY surge could extend in the near term. However, traders remain vigilant for potential intervention from Japanese monetary authorities, who have historically expressed concern when the currency pair approaches the 150.00 threshold.
As international trade tensions ease temporarily, currency markets continue adjusting to this shifting landscape, with the USD/JPY surge representing one of the most pronounced reactions to the weekend’s diplomatic breakthrough between Washington and Beijing.
