Increasing pressure on the dollar will probably mean that USD/JPY rallies are unlikely to last long until the narrative changes for the greenback. The pair is poised to post a new closing low for the year as the promise of German fiscal spending boosts the euro, while slumping oil prices and falling Treasury yields weigh on the dollar.

USD/JPY briefly surpassed 149 following an unexpected rise in ISM services, which turned the S&P positive. However, that optimism has since faded. An earlier ADP report showed a below-forecast 77,000 rise in private payrolls, casting doubt on the health of the U.S. economy. With more jobs data expected this week, including the February employment report on Friday, and a speech by Fed Governor Christopher Waller speech on Thursday, dollar bulls are content to sit on the sidelines.

On the other hand, yen bulls are awaiting more Bank of Japan signals. Deputy Governor Uchida’s speech on Wednesday showed a willingness to cautiously hike rates. Given heightened levels of uncertainty over tariffs, any dovish signals emanating from the central bankers will force out yen longs, with some accounts already trimming positions. But USD/JPY needs to top 152 in order to turn an otherwise bearish tide toward a new year-date low, currently 148.10.
Yen

(Robert Fullem is a Reuters market analyst. The views expressed are his own.)