USD/JPY: Dollar Rises Against Yen to Hit One-Month High of 148.60. What’s Behind Pop?

When steady interest rates meet a tariff rollback, the greenback stands to gain attention from forex bros.

📈 Dollar Rallies Against Yen

• The USDJPY pair advanced to start this week’s trading, popping as much as 2.1% to hit a one-month high of ¥148.60. While the rally has paused for breath Tuesday morning (to around ¥148.00), the powerful swing of the US dollar has left rival currencies in the dust. And now, traders are asking, what’s going on and should I buy in?
• The buck’s mighty advance this week is largely driven by trade war optimism, especially after Donald Trump said yesterday he’s agreed on a 90-day tariff reprieve with China.

🤝 Shake on It

• More precisely, tariffs on Chinese goods are getting axed by 115% to 30%. It’s a two-way deal — China is doing the same and lowering its levies on US goods to just 10% from 125%. While valid for only 90 days, the agreement sparked hopes that the worst of the tariff tension might be in the rearview.
• Naturally, the dollar got a sigh of relief after weeks of getting hammered on fears that high tariffs would dent supply chains and knock economic growth, rattle job stability, and increase inflation.

❤️ High Rates + Low Tariffs = It’s a Match

• Lowered tariffs go hand in hand with the Federal Reserve’s decision to hold interest rates unchanged. At their last meeting earlier this month, Fed officials warned that Trump’s lofty tariffs might drive consumer prices higher and risk tilting the economy in a recession. On the bright side, low tariffs might soften Fed’s position on high rates.
• With these anxieties getting down to a simmer, the dollar is seen making moves. Out and about, the American currency hit the euro with the EURUSD pair sliding 1.5% Monday to dive below $1.11. The British pound was also weak with the GBPUSD sliding under $1.32.

🔔 Inflation Data Up Next

• Looking ahead, Tuesday brings to markets the inflation data for April. Expectations are pinned at 2.4% year on year, unchanged from March’s clip. Brace yourselves for volatility (and trading opportunities) — any surprises might throw a curveball to forex trading.