The USD/JPY exchange rate experienced a pause in its upward movement and was sitting at approximately 155.90 during Asian trading hours on Wednesday. The currency pair is currently facing some downward pressure, primarily due to the persistent weakness of the US dollar (USD) following President Donald Trump’s inaugural State of the Union address of his second term, which was delivered before a joint session of Congress.
During the address, Trump highlighted what he termed as “many years of turnaround,” emphasizing the administration’s focus on economic gains, particularly in efforts to lower inflation. He also reiterated his commitment to addressing illegal immigration and the fentanyl crisis at the border. Furthermore, he hinted at the possibility of increasing tariffs on nations he believes are “playing games” with current trade agreements, especially after the Supreme Court put a stop to a range of extensive taxes.
However, the decline of the USD/JPY may be limited as the Japanese yen (JPY) could weaken, prompted by reports that Prime Minister Sanae Takaichi shared concerns about potential further interest rate hikes in discussions with Bank of Japan Governor Kazuo Ueda last week.
In contrast, Ueda noted that their conversations encompassed a broad spectrum of financial and economic topics, adding that the Prime Minister did not specify any requests regarding monetary policy.
Additionally, Japan’s Deputy Chief Cabinet Secretary Masanao Ozaki mentioned on Wednesday that the nuances of monetary policy should primarily be handled by the Bank of Japan. Meanwhile, Prime Minister Takaichi indicated a vigilant approach from the government toward exchange rate fluctuations, suggesting a certain level of anxiety.
