Dollar-Yen Nears ¥139.90 as Political Turmoil Pressures Greenback
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The dollar slipped another 0.36 per cent early Tuesday, pressing USD/JPY down to ¥139.90 and bringing a potential double‑bottom into sharp focus. The pair has already shed close to ten per cent since President Trump’s January 20 inauguration, and today’s slide underscores how quickly political risk is eclipsing traditional macro drivers for currency markets.
Technically, ¥139.90 is the lower edge of a multi‑month range that traders have defended since late 2024. A decisive break below that floor would invalidate the nascent double‑bottom pattern and open the way toward last autumn’s lows, yet a rebound could spark a momentum‑driven squeeze back into the 142‑144 corridor. Price action is being shaped less by economics than by the escalating standoff between the White House and the Federal Reserve. Trump’s latest social‑media barrage, branding Chair Jay Powell a “major loser” and demanding immediate rate cuts, is amplifying concern over central‑bank independence. That narrative is feeding risk‑off flows into the yen and gold while draining liquidity from the broader FX complex already rattled by renewed tariff threats.
For traders, the fulcrum is whether ¥139.90 holds. A sustained breach would confirm fresh downside potential, but even a technical bounce is unlikely to last without a clear easing of the political heat. Monitor headline risk around Fed policy, the trajectory of real‑yield differentials, and haven demand dynamics; together they will dictate whether the dollar’s sharp post‑inauguration decline stabilizes or accelerates.
Technically, ¥139.90 is the lower edge of a multi‑month range that traders have defended since late 2024. A decisive break below that floor would invalidate the nascent double‑bottom pattern and open the way toward last autumn’s lows, yet a rebound could spark a momentum‑driven squeeze back into the 142‑144 corridor. Price action is being shaped less by economics than by the escalating standoff between the White House and the Federal Reserve. Trump’s latest social‑media barrage, branding Chair Jay Powell a “major loser” and demanding immediate rate cuts, is amplifying concern over central‑bank independence. That narrative is feeding risk‑off flows into the yen and gold while draining liquidity from the broader FX complex already rattled by renewed tariff threats.
For traders, the fulcrum is whether ¥139.90 holds. A sustained breach would confirm fresh downside potential, but even a technical bounce is unlikely to last without a clear easing of the political heat. Monitor headline risk around Fed policy, the trajectory of real‑yield differentials, and haven demand dynamics; together they will dictate whether the dollar’s sharp post‑inauguration decline stabilizes or accelerates.