At the end of last week, President Trump said he would add a 30% tariff on goods from the EU and Brazil. Because of this, when the Tokyo market opened on Monday, the Euro-Yen went down, and the Dollar-Yen also dropped. The Dollar-Yen fell to 146.85 yen. However, later in the New York market, long-term US interest rates went up, so the Dollar-Yen rose again to 147.78 yen and stayed stable.
Many people in the market think Trump will eventually back down (this idea is called TACO – Trump Always Chickens Out), so the effect of the tariffs is not very strong now.
Today, the US June CPI (Consumer Price Index) will be announced. Some people believe the tariff effects may show in this data. If the CPI goes up as expected, it may be hard for the central bank to cut interest rates soon, so the Dollar may rise.
But if the CPI is lower than expected, it means there is no inflation, just like President Trump said. Then, pressure to lower interest rates will become stronger, and the Dollar-Yen may fall.
The market is not sure which direction to go, so if it moves too much in one way, there may be a strong reaction in the opposite direction later.
Expected USD/JPY Range: 145.60 yen – 148.60 yen
Note: This information does not guarantee profits. Please make your own decisions when trading.