- The Japanese yen prolongs its upward trend in front of the USD in the midst of divergent expectations between the Boj and the Fed.
- The hopes of an eventual commercial agreement between the US and Japan further benefit the JPY and contribute to the upward movement.
- The fundamental background favors the JPY bulls and supports the prospects of a new fall of the USD/JPY.
The Japanese Yen (JPY) touched a new two -week maximum against a US dollar (USD) in general weaker during the Asian session on Wednesday, despite the disappointing publication of the data of the commercial balance of Japan. Investors now seem convinced that the Bank of Japan (BOJ) will increase interest rates in 2025, amid fears of broader price increases and rooted in Japan. The expectations were reaffirmed by the hard line comments of the vice governor of the Boj, Shinichi Uchida, earlier this week, which continue to benefit the JPY.
Adding to this, the hopes of an eventual commercial agreement between the US and Japan compensated a generally positive risk tone and did little to affect the prevailing bullish feeling around the JPY, considered safe refuge. The USD, on the other hand, remains depressed amid the growing acceptance that the Federal Reserve (FED) will further reduce the costs of indebtedness and a surprising reduction of the sovereign credit rating of the US government of the US government. This contributes to the fall of the USD/JPY torque towards the level of 144.00 and supports the perspectives of an additional depreciative movement in the short term.
Japanese Yen bullies ignore the disappointing commercial data in the midst of bets due to an increase in boxwoods
- Government data published earlier this Wednesday showed that Japan’s trade balance was unexpectedly reduced to a ¥ 115.8 billion deficit in April, compared to a surplus of ¥ 559.4 billion in the previous month. Japanese imports were reduced at a slower pace than expected, since a significant increase in salaries during spring promoted private consumption, while export growth was decelerated drastically due to the lower demand of the USA after the highest import tariffs of US President Donald Trump.
- Government officials from Japan and the US are scheduled to carry out a third round of high -level commercial conversations in Washington this week. It is expected that Japan’s Minister, Ryosei Akazawa, attends conversations at the ministerial level with the US trade representative, Jamieson Greer. It is also expected that the US Treasury Secretary, Scott Bessent, participate in the negotiations. According to reports, US officials are pressing Japan for an early conclusion of conversations, suggesting that an agreement could be reached sooner.
- The vice governor of the Bank of Japan, Shinichi Uchida, told Parliament earlier this week that the underlying inflation of Japan will probably accelerate again after a slowdown period and will remain around the goal of 2%. The BOJ will continue to increase interest rates if the economy and prices improve as projected, Uchida added. In addition, the Boj’s opinions summary revealed last week that those responsible for politics have not renounced to further increase interest rates.
- In contrast, the operators increased their additional rate cuts of fees by the Federal Reserve (FED) in 2025 after the publication of last week of the Consumer Price Index (CPI) and the most soft production price index (PPI) of the most expected in the US in the US slow and should allow Fed to maintain their policy flexibility bias, which, in turn, drags the US dollar to a minimum of almost two weeks.
- Fed officials took the opportunity to express their concern for the current state of the US economy during a round table on Tuesday. The president of the Fed of San Francisco, Mary Daly, said that the net impact of commercial, immigration and others of the Trump government is unknown. In addition, the president of the Cleveland Fed Bank said the feeling about the economy is worrying and will take longer to observe how business decisions are affected by commercial policy.
- China accused the US on Monday of undermining the preliminary trade agreement after the latter issued a warning to the industry against the use of Chinese chips that indicated Huawei. In addition, the China Ministry of Commerce said Wednesday that US measures on advanced chips are “typical of unilateral harassment and protectionism.” In addition, US measures on Chips seriously undermine the stability of the semiconductor industry chain and the global supply chain.
USD/JPY seems vulnerable to a greater fall; rupture below the confluence of 144.30-144.20 at stake
From a technical perspective, the intradication falls to the USD/JPy torque below the confluence of 144.30-144.20, which includes the level of 50% setback of the rebound of April-May and the simple mobile average (SMA) of 200 periods in the 4-hour graph. In addition, the oscillators in the daily chart have begun to gain negative traction and support an additional short -term depreciative movement. Some continuation and acceptance sales below the level of 144.00 will reaffirm the bassist perspective and drag the currency pair towards the horizontal support zone of 143.65-143.60 on the route to the region of 143.25, or the level of fibonacci setback of 61.8%.
On the contrary, the peak of the Asian session, around the 144.55 area, now seems to act as an immediate obstacle, above which the USD/JPY torque could aspire to recover the psychological level of 145.00. However, any subsequent rise movement could continue to be seen as an opportunity for sale and remain limited near the region of 145.35-145.40, or the level of fibonacci setback of 38.2%. The latter should act as a key point, and a sustained movement beyond the short -term bias could change in favor of the bulls.
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.
