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The US Dollar (USD) weakened against the Japanese Yen (JPY) on July 16, 2025, as the USD/JPY pair retreated from an intraday high of 149.19 to hover near 148.00, with resistance solidifying around the 149.00 mark. The dollar’s pullback was driven by mounting speculation over President Donald Trump’s potential move to oust Federal Reserve Chairman Jerome Powell, coupled with mixed US economic data that muddled interest rate expectations. The US Dollar Index (DXY), which measures the dollar against a basket of major currencies, fell 0.63% to 98.018, reflecting broader dollar weakness.
Market volatility spiked as reports surfaced that Trump consulted officials about removing Powell before his term ends in May 2026. The rumors, fueled by Trump’s frustration with the Fed’s $2.5 billion headquarters renovation and Powell’s cautious approach to monetary easing, initially sent the USD/JPY tumbling. However, Trump later tempered the speculation, stating, “We aren’t planning on doing anything — but we are very concerned.” This ambiguous remark left markets uncertain, capping the dollar’s earlier gains and allowing the yen to claw back some ground after three days of losses.
Adding to the complexity, recent US economic indicators sent conflicting signals. Tuesday’s Consumer Price Index (CPI) data pointed to persistent inflation, reducing expectations for near-term Federal Reserve rate cuts. In contrast, Wednesday’s Producer Price Index (PPI) showed flat producer-level inflation in June, reigniting hopes for monetary easing. These mixed signals, combined with political uncertainty surrounding Trump’s intentions, kept investors on edge, limiting USD/JPY’s upside potential.
From a technical perspective, USD/JPY’s retreat from 149.00 underscores firm resistance at that level. If the pair holds above 148.00, it may retest 149.00 or higher. However, a break below 147.50 could signal further declines, potentially targeting the 100-day simple moving average near 146.80. As markets navigate Trump’s Fed-related rhetoric and shifting economic data, the USD/JPY remains poised for volatility, with traders closely monitoring both political developments and upcoming Fed decisions.
