USDJPY extends pullback on Trump's trade war, BoJ rate hike odds. What's next?

USDJPY continues to extend its pullback due to the impact of Trump's trade war declarations. The US President has threatened to impose a 10% tariff on the UK, France, and Germany if Greenland's acquisition is not permitted, leading to a broad weakening of the US Dollar. This has raised growth concerns, resulting in stock market sell-offs and falling Treasury yields. In contrast, the Japanese Yen has strengthened amid rising expectations for a rate hike from the BoJ following intense verbal intervention from officials. The probability of a rate hike by March surged to 22%, potentially supporting the JPY in the short term. Technically, USDJPY has been unable to sustain a hold above the 2025 high and sellers emerged once the price fell back below 158.87, with a target towards the 154.50 support level. Buyers are expected to wait for a break above 158.87 or approach the support level. The 4-hour chart shows a pullback into an upward trendline defining bullish momentum, where buyers are expected to step in, while sellers aim for a break lower into 154.50. Key catalysts to watch include upcoming US ADP job data, Japanese CPI, and the BoJ policy decision, all of which could significantly impact market dynamics.