- The Japanese yen is strengthened against a weaker USD for the third consecutive day on Monday.
- Divergent policy expectations between the BOJ and the Fed and the reactivation of the safe refuge demand benefited the JPY.
- The hopes of a commercial agreement between the US and Japan further support the JPY and weigh on the USD/JPY torque.
The Japanese Yen (JPY) remains in a favorable position against his American counterpart for the third consecutive day on Monday and seems to be prepared to strengthen even more in the midst of a combination of support factors. Tokyo’s consumer price index (ICC) indicated that the underlying inflation accelerated more than expected in May and reaffirmed the bets that the Bank of Japan (BOJ) will continue to increase interest rates. In addition, the persistent uncertainties related to trade and geopolitical risks turn out to be key factors that support the jpy of safe refuge.
Meanwhile, the comments of the main commercial negotiator of Japan, Ryosei Akazawa, suggested advances in commercial conversations with the US and fed the hopes of an imminent agreement as soon as this month, which, in turn, provides additional support to the JPY. The US dollar (USD), on the other hand, attracts new vendors due to the growing acceptance that the Federal Reserve (FED) will further reduce indebtedness costs in signals of a decrease inflation. This further benefits the JPY of lower performance and drags the USD/JPY below 143.00 during the Asian session.
The Japanese Yen is backed by a combination of support factors; It seems prepared to appreciate even more
- Tokyo’s consumer (ICC) price index has exceeded the 2% target of the Bank of Japan for three consecutive years and pointed to persistent food inflation on Friday. This could add pressure on the BOJ to increase interest rates again, which continues to support the demand of Japanese.
- The main commercial negotiator of Japan, Ryosei Akazawa, said that the last round of discussions with the Trump administration on tariffs has put them on their way to a commercial agreement as soon as this month. Akazawa added that the two parties will meet again before the Leaders Summit of the Seven Group.
- The US president Donald Trump said on Friday that he will double tariffs on steel imports from 25% to 50%. Previously, Trump lashed out against China, saying that he had violated his commercial agreement with the USA. The climbing occurs after a Federal Court of Appeals restored Trump’s tariffs.
- Ukraine launched one of his greatest drone attacks on Russia on Sunday, attacking five air bases inside the Russian territory and destroying more than 40 planes. Meanwhile, Russia bombed Ukraine with missiles and drones just before a new round of direct peace conversations in Istanbul.
- Israel continued its relentless bombing of the Gaza Strip, while Yemen’s rebels claimed the responsibility of a ballistic missile attack, which was intercepted, at Ben Gurion airport near Tel Aviv. This maintains the geopolitical risks at stake and benefits the safe refuge JPY.
- Meanwhile, the US PERSONAL CONSUMPTION PRICE INDEX (PCE) cooled at a rate of 2.1% year -on -year in April from 2.3% in the previous month. In addition, the underlying PCE price index, which excludes volatile food and energy prices, rose 2.5% compared to 2.7% in March.
- The data reaffirmed the expectations that the Fed will cut its objective for short -term indebtedness costs in September. Operators are also valuing the possibility of a second rate cut in December. This causes new sales of the US dollar and exerts even more pressure on the USD/JPY torque.
- Investors now expect the important macroeconomic launches of the United States scheduled for the start of a new month, starting with the ISM manufacturing PMI later on Monday. Apart from this, the appearance of the president of the FED, Jerome Powell, will be observed in search of short -term impulses.
The USD/JPY could extend the downward trajectory below the level of 143.00 in the middle of a technical bearish configuration
The failure of last week near the Fibonacci recoil level of 61.8% of the recent fall from the monthly peak and a subsequent fall below the simple mobile average (SMA) of 200 periods in the 4 -hour graph favor the bassists of the USD/JPY. This, together with negative oscillators in daily/hour graphics, suggests that the lower resistance path for cash prices remains down and supports the most deep losses perspectives. Therefore, some weakness of continuation towards the level of 143.00, en route to the following relevant support near the 142.40 zone, seems to be a different possibility. The pair could eventually fall to the 142.10 area, or the monthly minimum touched last Tuesday.
On the contrary, the 200 periods SMA in the 4 -hour graph, currently located just ahead of the round figure of 144.00, could now act as an immediate strong barrier. This is closely followed by the offer zone of 144.25-144.30, above which the USD/JPY torque could aspire to recover the psychological level of 145.00. A sustained fortress beyond the latter should pave the way for a movement towards the horizontal zone of 145.65 on a route to the round figure of 146.00 and the region of 146.25-146.30, or a maximum of two weeks touched last Thursday.
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.
