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>>USD/JPY drops sharply as the yen rallies amid a strong risk‑off wave following a pivotal tariff ruling

USD/JPY drops sharply as the yen rallies amid a strong risk‑off wave following a pivotal tariff ruling

crypthub

about 10 hours ago

Tariff Ruling Sparks Yen Rally

The WTO appellate decision upheld challenges to proposed tariffs on semiconductors and rare‑earths, unsettling global trade expectations. Investors quickly reassessed growth prospects, prompting a sell‑off in Asia‑Pacific equities. Capital fled to safe‑haven assets, lifting the Japanese Yen and pushing USD/JPY to its lowest level in three weeks.

Risk‑Off Capital Flows

During risk‑off episodes, market participants shift from equities and emerging‑market currencies into liquid refuges such as the Yen, Swiss franc and US dollar. The Yen’s surge was amplified by the unwinding of carry trades that had previously exploited Japan’s low rates. Relative fears about US trade policy further tilted demand toward the Yen over the dollar.

Central‑Bank Divergence

The Bank of Japan remains on an ultra‑loose yield‑curve control regime, while the Federal Reserve has paused rate hikes but stays data‑dependent. In sharp risk‑off moments, these policy differentials become secondary to capital preservation flows. Sustained Yen strength could pressure the BOJ to reassess its stance if export competitiveness erodes.

Outlook for USD/JPY

The pair has broken its 50‑day moving average and key support at 148.50, exposing lower targets around 146.80 and 145.00. Future direction will hinge on how trade tensions evolve and on upcoming US inflation and jobs data. Traders watch the 145 level as a possible trigger for Japanese authorities to intervene if the Yen’s rise accelerates.