USD/JPY ticks lower to near 151.90 despite some strength in US Dollar

• USD/JPY falls slightly even though the US Dollar trades higher, which indicates strength in the Japanese Yen (JPY).
• President Trump threatens to impose 25% tariffs on automobiles, semiconductors and pharmaceuticals.
• Investors await the FOMC minutes and Japan’s National CPI data for January.

The USD/JPY pair edges lower to near 151.90 in Wednesday’s North American session. The asset ticks lower even though the US Dollar (USD) trades higher, with the US Dollar Index (DXY) rising to near 107.20.

The Greenback gains as the market sentiment has turned slightly cautious due to tariff threats from United States (US) President Donald Trump. On Tuesday, Donald Trump threatened to impose 25% tariffs on imports of foreign cars, pharmaceuticals, and semiconductors. Trump didn’t provide any timeframe with intensions to allow local manufacturers to increase operating capacity.

Market participants expect Germany, Japan, South Korea, Taiwan, and India would be major casualties of Trump’s latest tariff threat.

Meanwhile, investors await Federal Open Market Committee (FOMC) minutes for the January meeting, which will be published at 19:00 GMT. In the January meeting, the Fed announced a pause in its monetary expansion cycle after cutting interest rates by 100 basis points (bps) in the last three meetings of 2024. Fed Chair Jerome Powell guided that monetary policy adjustments would become appropriate on when officials will see “real progress in inflation or at least some weakness in the labor market”.

On the Japan front, market participants will focus on the National Consumer Price Index (CPI) data for January, which will be released on Thursday. Economists expect the National CPU ex. Fresh Food to have accelerated to 3.1% from 3% in December. Hot inflation data would boost market expectations that the Bank of Japan (BoJ) will raise interest rates again this year.