From a trade policy standpoint, Japan is actively seeking to preserve its existing preferential treatment under the United States' revised tariff regime. The Japanese government has formally communicated to its U.S. counterparts its desire to continue benefiting from the equivalent preferential terms established by the bilateral trade agreement executed last year, within the framework of the new tariff system. This proactive approach aims to preempt any bilateral friction ahead of the Prime Minister's upcoming state visit to the U.S. next month. During a teleconference with U.S. Secretary of Commerce Howard Lutnick, Japanese Minister of Trade Ryosei Akazawa confirmed that both parties are committed to the good-faith and prompt implementation of the existing accord, and will maintain policy execution alignment. This Japanese appeal arises in the context of President Trump's recent shift in tariff strategy. Following a Supreme Court ruling invalidating tariffs imposed under the International Emergency Economic Powers Act, the administration has pivoted to utilizing an alternative legislative authority to impose a uniform temporary tariff on imports from all nations. This measure is accompanied by a warning that countries withdrawing from trade agreements with the U.S. could face elevated tariff rates. Japan harbors concerns that certain export products, currently subject to tariffs below 15% under the existing agreement, might encounter cumulative tariff burdens under the new framework. The agreement concluded in July of the previous year already reduced tariffs on automobiles and other goods to 15%, complemented by approximately US$550 billion in Japanese loan and investment commitments to the U.S. Japan currently has no intention of renegotiating this accord, as doing so could provoke more stringent, sector-specific tariff actions from the United States, particularly in critical industries like automotive manufacturing. Concurrently, subtle shifts are emerging in Japan's domestic monetary policy outlook. In a recent meeting with Governor Kazuo Ueda of the Bank of Japan, Prime Minister Takaichi expressed a cautious stance regarding further interest rate hikes. Governor Ueda emphasized that the discussion was a general exchange of views on the economic and financial landscape, and that the Prime Minister did not issue specific policy directives. Prime Minister Takaichi, in turn, conveyed her hope for close collaboration between the central bank and the government to achieve the 2% inflation target, particularly in light of sustained wage growth. Market participants had widely anticipated an earlier-than-expected rate hike by the Bank of Japan, driven by inflationary pressures and a weakening yen. Following a December rate increase to 0.75%—the highest level in three decades—and signals indicating further tightening, the subtle divergence in pacing between the government and the central bank has garnered increased scrutiny.

Several Federal Reserve officials recently indicated that maintaining the current interest rate at 3.5%-3.75% is appropriate, citing persistent inflation risks and a robust labor market. While markets still anticipate approximately three rate cuts this year, the probability of maintaining the status quo in the short term has increased. Domestically, consumers' expectations for price declines following the Supreme Court's rejection of emergency tariffs have not materialized. Numerous businesses have stated that any refunded tariffs will primarily be used to offset prior cost increases rather than reduce product prices. Given the unclear refund mechanism for approximately US$175 billion in collected tariffs, businesses widely anticipate a lengthy refund process, making immediate price reductions unlikely. Research indicates that U.S. consumers and businesses bear roughly 90% of tariff costs, which has not only driven up prices but also eroded consumer confidence and negatively impacted public perception of the previous administration's economic management. Despite this, recent data show U.S. consumer confidence improved beyond expectations in February. The Conference Board's consumer confidence index saw a modest rebound, reflecting a decrease in households' pessimism about future expectations, partly attributed to improved assessments of the labor market's outlook. However, the index remains significantly below previous peaks, with limited improvement in the employment landscape, and challenges persist regarding long-term unemployment and difficulties for recent graduates entering the job market. Economists generally believe that uncertainties stemming from trade and immigration policies continue to dampen business hiring intentions, and the overall effective U.S. tariff rate has not significantly decreased following the implementation of a new round of global tariffs.

In the 1D timeframe, the Bollinger Bands are narrowing, and the moving averages are flattening. The price has re-established itself above the EMA50. Following a MACD golden cross, the MACD line and signal line have converged towards the zero line, indicating a potential shift in market dynamics at any moment. The short-term rally is likely nearing its conclusion, and we anticipate consolidation between 152 and 156. If a break above 157.7 does not occur, a decline back to the 152 level is probable. In the 4H timeframe, the Bollinger Bands are widening upwards, and the moving averages are diverging positively. The price is oscillating upwards along the EMA12. However, despite the price reaching new highs, the MACD's upward momentum is diminishing, with the MACD line and signal line approaching a death cross, suggesting significant market divergence and a high probability of a corrective phase. The RSI stands at 65, indicating a bullish sentiment. The recommended trading strategy will involve shorting first, followed by buying.

Trading Direction: Sell

Entry Price: 156.4

Target Price: 152

Stop Loss: 158

Support: 152, 150, 149.5

Resistance: 160, 161, 162