Dollar Nears ¥139.90 Support as Trump’s Attacks Fuel Yen Surge

The U.S. dollar is under fire, sliding closer to a critical ¥139.90 support level against the Japanese yen as political turmoil in Washington rattles markets. The USD/JPY pair has lost nearly 10% since President Donald Trump’s inauguration on January 20, one of the sharpest drops to kick off a presidential term in decades. With Trump slamming Federal Reserve Chair Jay Powell online, demanding rate cuts or resignation, traders are dumping the dollar for safer bets like the yen and gold. As a potential double-bottom formation looms, the forex world is watching to see if the dollar can hold on.

Dollar’s Downward Spiral

The USD/JPY pair dipped to 140.816 on Tuesday, inching toward the key ¥139.90 support level, according to TradingView data. This level is critical—traders see it as a possible “double-bottom” pattern, a technical signal that could spark a rebound if it holds. But if the dollar breaks below ¥139.90, it could tumble further, possibly toward ¥137.80, a target some analysts on X are eyeing. “The yen’s gaining fast, and the dollar’s in trouble,” says Aiko Tanaka, a 32-year-old forex trader in Osaka. “Everyone’s watching that support line.”

The dollar’s woes stem from a perfect storm of political noise. Since January, the greenback has shed 10% against the yen, driven by fading optimism about Trump’s economic plans. Posts on X highlight a 1.91% drop in the past week alone, with the pair down 8.94% over the last year. The $6 trillion-a-day forex market is feeling the heat, and the USD/JPY, a major currency pair, is at the center of the action.

Trump’s War on the Fed

President Trump’s latest social media tirades are a big driver. Labeling Fed Chair Jay Powell a “major loser,” Trump has demanded immediate rate cuts or Powell’s resignation, posts on X confirm. This attack on the Federal Reserve’s independence is spooking investors. “When the president threatens the Fed, it shakes confidence in the dollar,” says Hiroshi Sato, a currency analyst at Tokyo’s Market Insights Group. “Traders are running to safe havens like the yen.”

Trump’s posts are proving as disruptive as major economic reports. A single tweet can send the USD/JPY pair swinging, with volatility hitting 1.07%, per TradingView. This political risk is compounded by Trump’s aggressive trade policies, including 145% tariffs on Chinese goods, which have sparked fears of retaliation and disrupted global markets, further boosting the yen’s safe-haven appeal. Japan’s Nikkei 225 fell to 26,500 on Monday, reflecting the regional unease.

Yen’s Safe-Haven Strength

The yen is thriving as investors seek stability. Unlike the dollar, which faces pressure from U.S. political uncertainty, the yen benefits from Japan’s steady monetary policy. The Bank of Japan is expected to maintain its rate-hike plan through 2025, supported by strong wage growth, with the Rengo labor union pushing for 5% raises, according to DBS Bank. This stability makes the yen a go-to currency in turbulent times, driving flows away from the dollar.

Gold is also gaining, hitting $2,700 an ounce this month, as investors hedge against dollar weakness. “The yen and gold are the winners when the dollar’s under attack,” says Sato. The USD/JPY’s 5.13% monthly decline underscores this shift, with traders on X noting the pair’s bearish trend within a falling wedge pattern.

Double-Bottom or Bust?

Technically, ¥139.90 is the line in the sand. A double-bottom formation—a chart pattern signaling a potential reversal—could form if the dollar holds here, sparking buying interest. “If we see a bounce, it could hit ¥144.00,” says Tanaka, echoing sentiment on X. But a break below ¥139.90 might trigger a sell-off, with some traders targeting ¥137.80 or lower. The Relative Strength Index (RSI) is nearing oversold territory, hinting at a possible pause, but bearish momentum remains strong, per Forex.com.

Why It Matters

The dollar’s slide affects more than traders. A weaker dollar makes U.S. exports cheaper but raises import costs, hitting American consumers. In Japan, a stronger yen boosts purchasing power but could hurt exporters like Toyota, who rely on a weaker yen to stay competitive. The $1.2 trillion U.S.-Japan trade relationship is at stake, with Japan’s exports making up 20% of its $4.9 trillion GDP, per World Bank data.

For businesses, the volatility is a headache. Companies hedging USD/JPY exposure are locking in rates around 140, says Sato, while investors are diversifying into yen-based assets. The broader $180 trillion global forex market is also reacting, with safe-haven currencies like the Swiss franc gaining ground.

Tips for Traders

With no major U.S. or Japanese economic data this week, Trump’s posts could dictate the next move. Traders should watch ¥139.90 closely, use stop-loss orders to manage risk, and avoid big bets until the support is tested. “Stay cautious,” advises Tanaka. “Trump’s tweets can change everything in a flash.” Checking privacy settings when using trading platforms is also wise, as data leaks are a growing concern.

What’s Next?

The USD/JPY pair is at a crossroads. A hold at ¥139.90 could signal a rebound, but a break below might deepen the dollar’s losses. With Trump’s rhetoric adding fuel to the fire, the yen’s safe-haven status is stronger than ever. “This is a high-stakes moment,” says Sato. “The dollar’s fate hangs on politics as much as charts.” As markets brace for more volatility, the battle at ¥139.90 is one to watch.

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