Behind Trump's crackdown on the US dollar: Why is the yen aiming for the 150 level

Analyst Win Thin recently pointed out that the Trump administration is taking “calculated risks,” and the weakening of the US dollar warrants close attention. The yen is expected to rebound and attempt to recover the 150 level. This reflects not only exchange rate fluctuations but also the superimposition of diverging global central bank policies and geopolitical risks. From the recent $550 million leveraged liquidations in the crypto market to gold breaking through $5000, the market is already demonstrating the deeper implications of this trend through concrete actions.

How Trump Policies Suppress the US Dollar

The Trump administration’s efforts to weaken the dollar are not accidental. According to analysts, currency depreciation is beneficial for US exports and employment, but the issue lies in the controllability of policy implementation. Currently, the Trump administration faces multiple risks: threatening to impose 100% tariffs on Canada, the risk of a US government shutdown (funding expires on January 30), and potential interventions in the currency markets.

These policy uncertainties directly diminish the attractiveness of the dollar. The New York Fed’s “exchange rate check” on USD/JPY further reinforces market expectations of policy adjustments. When a country’s central bank begins to focus on the exchange rate, it often indicates that authorities believe the current level has become unbalanced.

Diverging Central Bank Policies Push the Yen Higher

The core driver of yen appreciation stems from significant differences in central bank policies:

This policy divergence means the interest rate differential between the yen and the dollar will narrow significantly. For arbitrage traders who previously borrowed yen to invest in high-yield assets, this is a clear signal: the cost of holding dollar assets continues to rise.

The Significance of the 150 Yen Level

The 150 mark is not chosen arbitrarily. Over recent periods, USD/JPY has repeatedly tested around 150, establishing it as a key psychological threshold. Once the yen recovers past 150, it implies the dollar has depreciated by approximately 3.3% against the yen, which could have substantial effects on global arbitrage strategies and risk asset valuations.

Market Chain Reactions Are Already Evident

Recent information indicates that market reactions to this trend are already quite tangible:

• On January 26, the crypto market experienced over $550 million in leveraged long liquidations amid macroeconomic concerns, with Bitcoin briefly dropping to $86,000
• Safe-haven asset gold broke through $5000 per ounce for the first time in the same period
• The crypto derivatives market showed defensive positioning, with put options skewness and implied volatility both rising

These responses suggest the market is already preparing for a scenario of “dollar weakness and risk assets under pressure.”

Risks of Policy Out of Control Should Not Be Underestimated

Analyst Win Thin emphasizes that while currency depreciation can be advantageous, “once the situation spirals out of control, the consequences could be dire.” This warning points to risks at two levels:

First, Trump’s tariff threats could trigger retaliatory trade wars, further disrupting the currency markets. Second, although the US government shutdown risk is often resolved at the last minute, each occurrence increases market uncertainty premiums.

In this environment, the yen’s appreciation not only reflects diverging central bank policies but also market concerns over policy stability.

Summary

The attempt of the yen to recover the 150 level is driven by systematic suppression of the dollar through Trump policies, significant divergence among global central bank policies, and genuine market fears of policy out of control. This is not merely exchange rate fluctuation but a re-pricing of global liquidity and risk appetite. For the crypto market, this suggests that recent volatility may continue, with the key being whether Trump’s policies can be managed within controllable bounds. The market has already expressed anxiety through rising gold and safe-haven assets; the yen’s subsequent performance will serve as an important indicator of this round of policy risks.