• US-China trade de-escalation is less certain
• Germany IFO business climate beat forecasts
• Adidas rises 1.9% after upbeat earnings
• DAX recovery runs into resistance

USD/JPY Falls as US-China De-escalation Hopes Fade

• USD rally fades with trade tariff headlines in focus
• US composite PMI fell to a 16-month low
• USD/JPY recovers from 140.00 low, but is not yet a reversal

USD/JPY is falling, giving back yesterday’s gains as the USD recovers losses steam. The mood is souring, benefiting the safe haven yen amid doubts over US-China de-escalation.

The US dollar is once again under pressure after enjoying a sharp bounce in the previous session. Donald Trump backed away from threats to fire Federal Reserve chair Jerome Powell and moved towards a softer stance on China, supporting the USD.

Whilst U.S. Treasury Secretary Scott Bessent said on Tuesday that the ongoing tariff slowdown against China is unsustainable, the Trump administration also said that the US will set tariffs on China over the coming weeks and it depends on China as to how soon these come down. The comments raised doubts over any de-escalation, putting the US dollar under pressure.

According to the Federal Reserve Beige Book , concerns over falling business confidence and rising costs in the US are increasing. Meanwhile, U.S. business activity slowed to a 16-month low in April as the US economic outlook deteriorated due to Trump’s tariff policies.

Meanwhile, Federal Reserve officials could help limit USD losses due to hawkish comments. Jerome Powell said last week that the US central bank was in no rush to move on interest rates and cautioned that Trump’s trade tariffs point to a stagflation outlook.

The USD remains dependent on tariff headlines. US durable goods and jobless claims data will also be released later today.

On the inside, currency has been boosted by global events rather than domestic fundamentals. Alongside the first Swiss franc it’s been the favoured safe haven in the forex space and will likely to remain so.

The negative impact on the Japanese economy from tariff uncertainty and pressure on inflation from the surging yen could keep the OJ on the sidelines for now.

USD/JPY Technical Analysis

USD/JPY continues to trade in a falling channel, creating a series of lower lows and lower highs. The price ran into support at 139.90 and recovered higher, although it remains below the mid-point of the falling channel. The RSI remains below 50 and points downward favouring sellers.

Sellers will need to take out the 140 support zone to create a lower low and extend the downtrend.

Buyers would need to rise above 143.50, the weekly high, to extend gains towards the 145 round number and 146 resistance. A rise above here negates the near-term selloff.

The DAX and its European peers are falling on Thursday as investors weigh up mixed corporate results and remain cautious amid the changing US tone surrounding the trade war with China.

The situation regarding trade tariffs on China remains unclear. While the White House’s willingness to de-escalate the trade war helped European stocks and Wall Street recover on Wednesday, doubts are creeping back in after the Trump administration suggested it was up to China to come forward, something Beijing has so far shown little willingness to do.

On the economic calendar, German Ifo business sentiment improved slightly to 86.9, ahead of the 85.2 expected. This is certainly a better figure than feared, given the trade uncertainty. The German manufacturing PMI was also better than expected yesterday, rising to 48 ahead of the 47.6 forecast, and these two surveys are closely linked.

On the earnings front, Adidas (OTC: ADDYY ) is rising 1.9%, the top performer after the German sportswear maker reported Q1 sales and profits above expectations.

Elsewhere, Brenntag and SAP were the largest fallers, trading over 3% lower.

DAX Forecast – Technical Analysis

The DAX has extended its recovery from the 18,800 2025 low, rising above the 200 SMA and 21,500 before running into resistance just below the 50 SMA at 21,900, having created a higher high.

Buyers will look to extend the rise above 22,000 and the 50 SMA towards 22,500.

Immediate support is at 21,500, with a break below her negating the near-term uptrend. Below here 21,670 the weekly low comes into play.

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