- The Japanese Yen advances slightly as Trump’s new tariffs increase the demand for safe refuge assets.
- The expectations that the BOJ will raise interest rates again turn out to be another factor that supports the JPY.
- The expectations that the Fed could delay the cuts of fees benefit the USD and support the USD/JPY.
The Japanese Yen (JPY) attracted some safe refuge flows during the Asian session on Tuesday in reaction to the new tariffs of US President Donald Trump about steel and aluminum imports. Apart from this, the plans of the Bank of Japan (BOJ) to further increase interest rates turn out to be another factor that supports the JPY. This, in turn, keeps the USD/JPY below the 152.00 brand and a confluence support rupture point converted into resistance that was tested again on Monday.
Meanwhile, Trump -free tariffs on imports of basic products effectively end agreements with the European Union, the United Kingdom, Japan and other countries. This endangers Japan’s economic stability and acts as a wind against JPY. In addition, the expectations that Trump’s policies would increase inflation and delay rates cuts by the Federal Reserve (Fed) support the US dollar (USD) and help limit the losses of the USD/JPY torque.
Japanese and support from a combination of factors; The bulls still have the advantage
- The president of the USA, Donald Trump, signed an order on Monday that imposes a 25% tariff on the imports of steel and aluminum to the US, feeding fears of commercial war and supporting the Japanese Yen as a safe refuge.
- The governor of the Bank of Japan, Kazuo Ueda, and the Vice Governor Himino, recently pointed out the possibility of another increase in interest rates if the economy and prices are aligned with the projections of the Central Bank.
- In addition to this, the member of the Boj Board, Naoki Tamura, said those responsible for policies need to increase interest rates to 1% in the second half of the fiscal year that begins in April to face the increase in prices
- In addition, several Boj officials are in favor of more rates increases, since inflation is weighing on consumer spending. The underlying inflation of the consumer in Japan has exceeded the goal of 2% of the BOJ for almost three years.
- Meanwhile, the concerns that Trump’s policies revive inflation in the US could force the Federal Reserve to maintain its hard line position, backed by an economy and a US labor market still resilient.
- The market approach now moves to the two -day testimony of the president of the FED, Jerome Powell, which begins this Tuesday, which could provide clues about the trajectory of rates cuts and influence the US dollar.
- Apart from this, the publication of the latest inflation figures to the US consumer on Wednesday will determine the short -term trajectory of the USD and will provide a significant impulse to the USD/JPY torque.
USD/JPY is still vulnerable while below the confluence support of confluence of 152.50
From a technical perspective, the failure of the previous night near the point of confluence support of 152.50, now converted into resistance, and the subsequent fall favor the bearish operators. In addition, the oscillators in the daily chart remain deeply in negative territory and are still far from being in the overall area. This, in turn, suggests that the path of lower resistance for the USD/JPY torque is down.
However, any additional fall is more likely to find some support near the horizontal zone of 151.30 before the 151.00-150.90 area, or the lowest level since December 10 touched last Friday. Some continuation sales below will reaffirm the negative bias and make the USD/JPY pair vulnerable to weakening even more towards the 150.00 psychological brand, with an intermediate support near the region of 150.55.
On the contrary, the confluence of 152.50 – which includes the simple mobile means (SMA) of 100 and 200 days – could continue to act as a strong immediate obstacle. However, a sustained strength beyond this level could trigger a short coverage movement and allow the USD/JPY to recover the round figure of 153.00. Recovery could extend even more, although it is likely to remain limited near the region of 153.75.
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.
