- The Japanese Yen depreciates for the fourth consecutive day in front of his American counterpart.
- The moderate perspective of the BOJ and a positive risk tone continue to undermine the JPY, considered safe refuge.
- The USD preserves its profits to a maximum of several weeks and also offers support to the USD/JPY pair.
The Japanese Yen (JPY) is still undermined by the moderate pause of the Bank of Japan (BOJ) the previous day and falls to a minimum of more than three weeks in front of his US counterpart during Friday’s Asian session. In fact, the BOJ cut its economic growth and inflation forecasts for the current year in the midst of greater uncertainty about US commercial tariffs. Investors reacted quickly and reduced their bets on future increases in interest rates. Apart from this, the optimism about the possible de -escalation of the commercial war between the US and China, the two largest economies in the world, undermines the JPY, considered safe refuge.
Meanwhile, hope of tariff agreements between the US and its business partners continue to support a positive risk tone. This, along with an unexpected increase in the unemployment rate of Japan, weighs on the JPY. In addition, the recent increase in the yields of the US Treasury bonds helps the US dollar (USD) to stand firm near a maximum of several weeks and turns out to be another factor that drives the USD/JPy to rise for the fourth consecutive day. However, the prospects for a more aggressive loosening of politics by the Federal Reserve (FED) could limit the USD and offer some support to the lower performance before the US Non -Agricultural Payroll (NFP) report.
The Japanese yen is still pressed by the moderate pause of the BOJ on Thursday and a positive risk tone
- The Bank of Japan, as was widely anticipated, kept the short -term interest rates stable at 0.5% and adopted a cautious tone by cutting its growth and inflation forecasts. The Central Bank expects the Japanese economy to grow 0.5% in the current fiscal year against its previous 1.1% projection in January and review its underlying IPC prognosis from 2.4% to 2.2% for fiscal year 2025.
- In the press conference after the meeting, the governor of the BOJ, Kazuo Ueda, said that the uncertainty derived from commercial policies increased dramatically and that the time to achieve the inflation objective of 2% will be delayed a bit. This forced investors to reduce their bets for the next increase in BOJ rates in June or July and dragged the Japanese yen downward for the fourth consecutive day on Friday.
- However, the BOJ reiterated that it is still committed to increasing interest rates if the economy and prices move in line with their forecasts. However, this is recently impressing the JPY bulls in the middle of the last optimism fed by the hopes of commercial negotiations between the US and China, who continue to support a generally positive tone in the global shares markets.
- In fact, China’s state media said Thursday that the administration of US President Donald Trump had used several channels to contact Beijing and had been looking to start tariff negotiations. The statement follows Trump’s claims that the conversations between the two nations were already underway, an affirmation that China has repeatedly denied publicly.
- Japan Finance Minister Katsunobu Kato said Friday that the more than 1 billion dollars in US Treasury Bond Huits control currency movements.
- In the Front of Economic Data, a report published by the Japan Statistics Office today showed that the unemployment rate rose to 2.5% in March from 2.4% of the previous month. However, Japan’s average unemployment rate in fiscal year 2024 fell 0.1% compared to the previous year, to 2.5%, marking the first improvement in two years due to labor shortage.
- From the USA, the Labor Department reported Thursday that initial unemployment subsidy applications increased from 223,000 to 241,000 in the week that ended on April 26, marking the highest level since February. In addition, the USM manufacturing PMI of the United States firmly remained in contraction territory for the second consecutive month, although it fell less than expected, from 49.0 to 48.7 in April.
- This adds to the disappointing US ADP report on employment in the private sector and points to signs of a cooling in the labor market. To this is added a surprising contraction in the US GDP for the first time since 2022 and the decrease in inflationary pressures that continue to feed speculations about more interest cuts cuts by the Federal Reserve later this year.
- However, the US dollar seems not to be affected and seeks to consolidate a three -day bullish trend towards a maximum of three weeks, which, in turn, pushes the USD/JPY to the neighborhood of 146.00 during the Asian session on Friday. The operators now expect the US Non -Agricultural Payroll (NFP) report to obtain clues about the FED policy perspective and some significant impulse.
The USD/JPY bulls now wait for a movement beyond the 200 periods in the 4 -hour graph
From a technical perspective, the night break above the level of fibonacci recoil of 38.2% of the March-April fall and the psychological brand of 145.00 was seen as a key trigger for upward operators. In addition, the oscillators in the daily chart have begun to gain positive traction and suggest that the lower resistance path for the USD/JPy torque is upwards. However, the subsequent movement beyond the 50% Fibonacci level stops near the simple mobile average (SMA) of 200 periods in the 4 -hour graph.
This makes prudent waiting for a shopping beyond the 146.00 brand before positioning itself for an extension of the recent recovery movement from a minimum of several months. Cash prices could then rise to the intermediate resistance of 146.55-146.60 before trying to prove the 61.8%Fibonacci level, around the 147.00 neighborhood.
On the other hand, the 145.25 area could offer immediate support before the round figure of 145.00. Any additional corrective drop could now be seen as a purchase opportunity and remain limited near the region of 144.30-144.25, or the 38.2%fibonacci setback level. However, a convincing rupture below the latter could cause some technical sales and drag to the USD/JPy torque below the 144.00 mark, towards the middle zone of 143.00 and eventually at levels below 143.00.
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.
