BUZZ-COMMENT-Reasons to be bearish yen have diminished

Jan 29 (Reuters) - Tariff risks remain an overhang for markets, thus the key focus for traders is whether President Trump will stick to his self-imposed deadline and announce measures as soon as Feb. 1, backdrop which means that there are reasons to be less bearish on the Japanese yen.

The current anxiety has kept the Japanese yen bid, particularly on the crosses, against those most vulnerable to tariffs, such as the Canadian dollar.

Adding to this view has been the recent news surrounding China’s low-AI model, DeepSeek, which has called into question the U.S. exceptionalism trade, leading to a repricing in crowded AI bets, most notably in Nvidia. As such, a more sustained sell-off in mega cap U.S. tech stocks pointing to outflows from the U.S. would likely be a negative for the dollar and, by extension, open the door for downside in USD/JPY.

That being said, as is often the case, U.S. yields are still the key driver for USD/JPY and with the benchmark 10-year sitting on support at 4.5% a firm break below will be needed for a lurch lower in USD/JPY.

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