During Wednesday's Asian trading session, USD/JPY retreated slightly to around 155.90, continuing the technical correction following the previous day's gains. The current exchange rate movement is primarily influenced by changes in sentiment towards the US dollar, rather than being driven solely by the fundamentals of the Japanese yen.

In his State of the Union address, US President Trump emphasized the achievements of economic recovery and declining inflation, but the market was more focused on his trade policy statements. Trump indicated that he might impose higher tariffs on countries that "violate trade agreements." If trade frictions escalate, it could weaken global economic growth expectations and suppress demand for dollar assets.

Meanwhile, uncertainty surrounding Japan's monetary policy limited the yen's appreciation. The Japanese Prime Minister expressed concerns about further interest rate hikes during a meeting with the Bank of Japan governor. Although the Bank of Japan maintains its policy independence, the cautious stance on the pace of interest rate hikes at the political level has kept the market wary of the yen's potential for further appreciation.

Japan's Deputy Chief Cabinet Secretary stated that monetary policy should be determined independently by the Bank of Japan, while the government will closely monitor foreign exchange market fluctuations to prevent excessive exchange rate volatility. Overall, the weaker US dollar and the uncertainty surrounding yen policy have offset each other, causing the USD/JPY exchange rate to temporarily remain range-bound.

From a daily chart perspective, USD/JPY remains in a high-level consolidation range. The area around 155.90 is a short-term equilibrium zone between bulls and bears, and the price has failed to break out of its trend. The key resistance level is around 157.00, a region that combines previous highs with a psychological level.

If the exchange rate breaks through and holds above 157, it may open up further upside potential. The first support level to watch is the psychological level of 155.00, which is a short-term buying area. A break below 154.20 could strengthen short-term bearish momentum, potentially leading to a retest of the 153.50 area.

In terms of technical indicators, the momentum indicator is still in the neutral to strong zone, indicating that the market has not yet entered the trend reversal stage and is more likely to maintain a high-level consolidation structure.


Editor's Note:

The current USD/JPY exchange rate movement reflects a typical macroeconomic game structure. The US dollar is suppressed by trade policy uncertainty, while the Japanese yen is constrained by the unclear path of its monetary policy. The key to future exchange rate trends lies in two points: first, whether the US will further strengthen its tariff policy; and second, whether the Bank of Japan will release clearer signals regarding interest rate hikes.

If the policy divergence between the US and Japan widens further, USD/JPY may re-enter a trending market; otherwise, the exchange rate is more likely to maintain a high-level range-bound trading pattern.