USD/JPY falls as weak risk sentiment, trade tensions drive Yen strength

• USD/JPY trading below 143.00 while safe flows support Japanese Yen.
• The United States rejected Japan's tariff release request; Agriculture talks expand the trade agenda.
• Traders are waiting for the Federal Reserve Guide to the midst of the increase in produce and mixed data.

The USD/JPY continues to trade less while the revised safe request supports Japanese Yen (JPY). Raised trade tensions between the United States (US) and Japan, accompanied by investment in the precursor to the upcoming decision of the Federal Reserve (FED) policy decision, weighs the pair and contributes to the broader market volatility.

At the time of writing, USD/JPY traded at 142.68, down 0.71% in the day. This refusal came despite increasing US treasury yields, with a 10-year note of up to 4.36%, its highest level in two weeks. The difference -Bi -variety features an increase in geopolitical uncertainty and policy, which in turn puts fuel defending money markets.

The US has denied Japan's request for Tariff Relief

On Monday, the United States formally rejected Japan's request for a full exemption from the same 10% “reward” tariff and a 14% specific country.

While the latter remains suspended until early July, US officials – including Treasury Secretary Scott Bestent – have indicated that only a slight reduction can be considered, and whether the development of negotiations is significant.

The decision raised concerns in Tokyo, especially within the export-reliant sectors such as vehicles and steel. Japanese authorities emphasized the country's significant trace of investment in the US and seek to prevent further damage to bilateral economic relations. Secretary Bescent is expected to issue comments later on Tuesday, which may offer additional directions for Yen Crosses and FX sentiment.

A US agricultural visit indicates a broader approach to organizing

In a parallel development, the US secretary of Agriculture Brooke Rollins is expected in Tokyo this week to uphold for expanded access for American -agricultural products. His visit indicates a broader strategic push from Washington, where trade goals are increasingly intertwined.

Although agricultural discussions were formally different from industrial tariffs, market participants viewed Rollins's visit as part of a greater diplomatic effort to secure concessions in many sectors. For Japan, the visit came amid increased inflation of food price and domestic political pressure to protect local producers. An agricultural compromise can open the door to tariff flexibility, with potential implications for the money perspective if tensions are easy.

The Federal Reserve's decision focused on because the guide takes stage

The Federal Reserve will announce the decision of its policy on Wednesday, and while no change in the benchmark interest rate is expected, the meeting is considered quite significant for the forward guide. The tone of Jerome Powell's press conference will be critical for positioning the market in the second half of the year.

Following the stronger April-than-anticipated non-reliable payroll on Friday, the expectations of imminent rates in the rate softened. However, the increasing wage growth (0.2% month-to-month) and inflation moderation in recent data maintain hope for the prevention of life policy. The market is now pricing at about a rate cut by the end of the year, a well -known shift from the earlier forecasts of two or more.

Entrepreneurs focus on the tone of chair Powell in inflation, labor market strength, and external risks such as trade tensions.

A more careful or hawkish tone from the Fed can offer short-term US dollar (USD) support, which potentially stop the current USD/JPY decline. However, if Fed's signs are growing concern over the economic tenderness or outlines a clear path to the cuts, the pair may undergo a modified pressure, especially given the safe appeal of yen in the midst of uncertainty and unrelated trade.

In short, the direction of the USD/JPY in the upcoming sessions is likely to be dependent on whether the federal reserve struck a tone of patience or signal of a pivot toward the residence.

USD/JPY Bias turns below 144.00

The USD/JPY remains under the close pressure following a clear decline of 144.28 on Monday. The pair is from break under the psychological level of 144.00 and is currently testing support by around 143.00.

The price action moved below the 20-day simple moving average (SMA), which adopted a short-term bias, which could open the door for the next level of psychological support at 142.00.

Upside down, the initial resistance was visible at 144.00, followed by 144.28 swing high. A rest above this zone is required to re-establish the bullish momentum, but any recovery is likely to remain fragile unless supported by a clear change in policy tone from the Federal Reserve or easASing trading tensions.

Momentum indicators, including the Kamag -child index of strength (RSI), decrease and remain below the neutral, supporting a careful view as the pair holds under the basic resistance.

USD/JPY Daily Chart