USDJPY is rising after the Takaichi-Ueda meeting. According to some local media reports, Takaichi talked against more rate hikes and showed a tougher stance. With the news, the honeymoon period for the yen that started with the election seems to be ending. However, the bond market continues its bullish stance, so the reaction has a chance to remain temporary. We still expect a yen rally to start in the second or third quarter, but currently the upward pressure remains ongoing.

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USDJPY was able to hold the trendline from Trump’s “Liberation Day,” where he announced the new tariff regime. After Takaichi’s sweeping victory, it fell to the main trendline and tested it, but the trend is still holding. The new upward reaction is now testing the short-term downward trendline (yellow), which could determine the direction going forward. If it holds, USDJPY might push for a new test of the main trend, but a break could lead the currency toward 160, where talks of intervention have amplified again.

USDJPY will not be affected heavily by Japan’s side alone. After the US Supreme Court found Trump’s tariffs illegal, there is huge uncertainty in global trade. Trump plans to increase the global tariff rate to 15% and then use “national security” to tailor tariffs, but what the final version will be, what will happen to tariff revenue until the court decision, how Congress will react, and how trade partners will react are some of the unknowns in the post-ruling environment.