USD/JPY Rockets Toward 149, Posts Largest Daily Gain Since March 2020 on Tariff Optimism
Technical Analysis:
USD/JPY surged dramatically higher on Monday, marking its best daily performance since March 2020 and expanding its intraday range substantially from an earlier low of 145.60 to a high of 148.64 on the EBS platform. The sharp upward move was primarily driven by an intense short squeeze as investors rapidly adjusted positions in response to a significant easing of U.S.–China tariff tensions. Comments from Fed Governor Kugler, indicating reduced urgency for aggressive Fed rate cuts following the trade compromise, provided further impetus for the dollar, underpinning U.S. Treasury yields, with the 2-year yield notably rising 12 basis points to support the pair’s climb.
From a technical viewpoint, the decisive break into the Ichimoku daily cloud highlights strong bullish momentum, confirming an important medium-term shift. The pair’s sustained trade above the upper Bollinger Band, currently near the 147.00 zone, underscores the robust strength of this upward push and signals potential for further gains. Immediate resistance is now positioned at the 148.65–148.70 zone, coinciding with the significant lows established on December 3 and March 31. A clear breach above this resistance cluster would open a rapid path toward the April 3 high at 149.25, and ultimately bring the critical 200-day moving average (149.70) into sharp focus.
Despite the rapid ascent, the downside remains well-defined, offering clear technical reference points for traders. Initial support now resides at the Ichimoku cloud base at 147.88, followed by robust support at the confluence of the 55-day moving average and upper Bollinger band around 146.62–146.93. Below these key support levels, the May 8 high at 146.20 stands as a further barrier to potential corrective pullbacks. However, the bullish bias remains dominant, particularly amid expectations of potential additional Japanese government stimulus, making any short-term pullbacks likely to attract renewed buying interest.