USD/JPY Surges on Trump's 25% Tariff Threat to Japan

USD/JPY rallied sharply as President Trump's announcement of potential 25% tariffs on Japanese goods sparked concerns about Japan's economic outlook. The tariff threat adds significant pressure to Japan's export-dependent economy, already struggling with weak domestic demand and deflationary pressures. Market participants fear the tariffs could reduce Japanese corporate earnings and weaken the yen further as the Bank of Japan may be forced to maintain ultra-loose monetary policy longer than anticipated. The pair has broken above key resistance levels, with momentum indicators suggesting continued upside potential. Technical analysis shows immediate resistance at 157.50, while support has formed at 156.00. The widening interest rate differential between the US and Japan, combined with trade tensions, suggests USD/JPY could test the 158.00 psychological level if risk-off sentiment persists.