USD/JPY has softened to approximately 154.35 during the early Asian session on Monday, reflecting a decline of 0.46%. Trump announced an increase in global tariffs from 10% to 15%. Soft inflation data from Japan may dampen expectations regarding potential interest rate increases by the Bank of Japan. The USD/JPY pair sees some selling pressure near 154.35 in the early hours of Asian trading on Monday. The US Dollar is experiencing a decline in value relative to the Japanese Yen due to ongoing tariff uncertainty. The US Producer Price Index report for January is set to capture attention later on Friday.
Tariff uncertainty persisted following US President Donald Trump’s criticism of the US Supreme Court for nullifying his application of emergency powers to implement what he termed reciprocal tariffs. On Saturday, Trump announced his intention to raise the global tariff from 10% to 15% in order to maintain protective trade measures and to launch multiple investigations.
Conversely, Japan’s National Consumer Price Index experienced a year-over-year increase of 1.5% in January, down from 2.1% in December. This figure marked its lowest point since March 2022. Core inflation recently reached a two-year low of 2% in January, aligning with the Bank of Japan’s target. The recent inflation report has moderated expectations regarding a prompt interest rate increase from the BoJ. This, in turn, could exert pressure on the JPY and limit the downside potential for the pair.
In the wake of Prime Minister Sanae Takaichi’s success in the snap election, market participants will be vigilant regarding the possible fiscal spending initiatives. Japanese Prime Minister Sanae Takaichi stated on Friday that essential expenditures will be financed to the greatest extent possible through the initial budget. She further indicated that she will consistently reduce the debt-to-GDP ratio and reestablish fiscal sustainability.