This Week's Market Strategy - May 7, 2025 (Wed)

USD/JPY has fluctuated wildly during the Golden Week.

The dollar rose following President Trump's softening stance on China tariffs at the end of April, but subsequently fell to the 142 yen level due to the worst-ever US trade deficit.

The 10-year government bond auction was also strong, leading to softer long-term interest rates.

This morning, the pair has recovered from 142.42 yen to 143.31 yen.

We should continue to pay close attention to further developments in the mutual tariff negotiations.

Today, focus on the Federal Open Market Committee (FOMC) conclusion and policy rate announcement at 3:00 AM JST (expected to hold at 4.25-4.50%), followed by Fed Chair Powell's press conference at 3:30 AM.

With the holiday break ending and the FOMC ahead, movements may be limited. Technically, the support level for USD/JPY is yesterday's low of 142.36 yen, and resistance is 143.31 yen.

We want to take positions depending on which of these levels is broken.