- The EUR/JPY advances to a maximum of more than a week in reaction to the commercial agreement between the US and China.
- Betting for an increase in Boj rates limit the deepest losses of the JPY and capan cash prices in the midst of a weaker Eur.
- The operators seem reluctant and expect the US statement and China on the commercial agreement.
The EUR/JPY crossing recovers positive traction on Monday and jumps to a maximum of more than a week, around the 164.20 area during the Asian session, although it lacks follow -up. Cash prices go back almost 50 pips from the daily maximum and are currently negotiated around the region of 163.85-163.80, even with an increase of 0.20% in the day in the middle of a Japanese and weaker (JPY) weaker.
The White House announced on Sunday that a commercial agreement with China had been reached after the high -level meeting in Switzerland during the weekend. The last optimism triggers a new ola of global risk of risk at the beginning of a new week and undermines the demand for traditional assets of safe refuge, including JPY. Apart from this, concerns about Japan’s growth prospects due to uncertainty about US tariffs seem to weigh even more about the JPY.
However, the operators seem reluctant to open aggressive directional bets and choose to wait for the joint statement of the US and China about commercial conversations in Geneva to obtain more details about the agreement. In addition, bets that the Bank of Japan (BOJ) will increase interest rates in 2025 in the midst of fears of broader price increases in Japan limit the deepest losses of the JPY. The minutes of the March meeting of the BOJ revealed that the Central Bank is ready to increase rates even more if inflation trends are maintained.
Apart from this, a modest rebound of the US dollar (USD) exerts pressure on the shared currency and contributes even more to capo the EUR/JPY crossing. Meanwhile, the bets that the European Central Bank (ECB) will continue to cut rates in the middle of a slowdown inflation and growing downward risks for growth mark great divergence compared to the hard line expectations of the BOJ. This could further stop the operators of opening aggressive bullish bets around the EUR/JPY crossing and limit profits.
And in Japanese faqs
The Japanese Yen (JPY) is one of the most negotiated currencies in the world. Its value is determined in general by the march of the Japanese economy, but more specifically by the policy of the Bank of Japan, the differential between the yields of the Japanese and American bonds or the feeling of risk among the operators, among other factors.
One of the mandates of the Bank of Japan is the currency control, so its movements are key to the YEN. The BOJ has intervened directly in the currency markets sometimes, generally to lower the value of YEN, although it abstains often due to the political concerns of its main commercial partners. The current ultralaxy monetary policy of the BOJ, based on mass stimuli to the economy, has caused the depreciation of the Yen in front of its main monetary peers. This process has been more recently exacerbated due to a growing divergence of policies between the Bank of Japan and other main central banks, which have chosen to abruptly increase interest rates to fight against inflation levels of decades.
The position of the Bank of Japan to maintain an ultralaxa monetary policy has caused an increase in political divergence with other central banks, particularly with the US Federal Reserve. This favors the expansion of the differential between the American and Japanese bonds to 10 years, which favors the dollar against Yen.
The Japanese Yen is usually considered a safe shelter investment. This means that in times of tension in markets, investors are more likely to put their money in the Japanese currency due to their supposed reliability and stability. In turbulent times, the Yen is likely to be revalued in front of other currencies in which it is considered more risky to invest.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
