- The Japanese yen resumes its short -term bassist tendency in the midst of the decrease in the demand for secure refuge.
- The USD purchase appearance provides an additional impulse to the USD/JPY pair.
- Divergent policy expectations between the BOJ and the Fed should limit the losses of the JPY and fall cash prices.
The Japanese Yen (JPY) attracts new sellers during the Asian session on Tuesday, since optimism about the resumption of commercial conversations between the US and China Socava the safe refuge assets. This, together with a modest rebound of the US dollar (USD), raises the USD/JPY torque beyond the 145.00 psychological brand, reaching a maximum of almost two weeks in the last hour. However, a combination of factors could stop JPY bassists to carry out aggressive directional bets and limit currency pair profits.
In the context of signals of an expanding inflation in Japan, an upward review of the GDP of the first quarter reaffirmed the bets that the Bank of Japan (BOJ) will continue to increase interest rates. This marks a great divergence compared to a relatively Dovish Federal Reserve (Fed), which should limit the USD and benefit the JPY of lower performance. In addition, the persistent uncertainties related to trade and the increase in geopolitical tensions support the perspectives of the appearance of purchases at lower levels around the JPY.
The Japanese yen is undermined by optimism in commercial conversations between the US and China
- Senior US officials and China will meet for the second day in London on Tuesday for negotiations aimed at resolving the ongoing commercial dispute between the two largest economies in the world. Investors are still hopeful for an advance in the export controls of goods, such as rare earths, which continues to support a positive risk tone and undermine the Japanese and safe refuge yen.
- The data published on Monday showed that the economy of Japan contracted at a slower pace than initially estimated, in 0.2% annualized during the quarter of January-March, which generated optimism about perspectives. This, in turn, reaffirms the market bets that the Bank of Japan will continue to normalize the rates in the middle of persistent inflation and should help limit any significant fall for the JPY.
- The governor of the Boj, Kazuo Ueda, said Tuesday that the Central Bank will increase interest rates if it has enough confidence that the underlying inflation is approaching 2% or remains around 2%. If the economy and prices face a strong downward pressure, the Central Bank has a limited margin to support growth with rates cuts, with the short -term rate even at 0.5%, Ueda added.
- A Non -Agricultural Payroll (NFP) report from the US stronger than expected on Friday reduced the hopes of imminent cuts of interest rates on the part of the Federal Reserve this year. This helps the US dollar to recover positive traction after the modest fall of the previous day and pushes the USD/JPY torque closer to the 145.00 psychological brand during the Asian session on Tuesday.
- However, operators are still valuing a greater probability that the US Central Bank reduces indebtedness costs in September. In addition, Trump intensified his pressure campaign and asked the president of the FED, Jerome Powell, to cut the rates at a complete percentage point. This, together with concerns about the financial health of the US government, could limit a greater appreciation of the USD.
- According to the Ukraine Air Force, Russia launched a massive air attack against Ukraine and fired almost 500 drones and missiles, marking a new escalation of the conflict in the three -year war. This maintains the geopolitical risks at stake, which should stop JPY bassists to perform aggressive bets and act like a wind against the USD/JPY torque before the US inflation figures.
The USD/JPY could now aim to recover the round figure of 146.00
From a technical perspective, the night rebound from levels below 144.00, or the simple mobile average (SMA) of 100 periods in the 4 -hour graph, and the subsequent rising movement favor the USD/JPY bulls. In addition, the oscillators in the daily chart have begun to gain positive traction, suggesting that the path of lower resistance for cash prices is upwards. Therefore, a continuation of the force towards the intermediate obstacle of 145.60-145.65, en route to the round figure of 146.00, seems a different possibility. The impulse could extend even more towards the region of 146.25-146.30, or the maximum of May 29.
On the contrary, the 145.00 mark now seems to protect the immediate fall before the region of 144.60-144.55. This is closely followed by the 144.25 area (SMA of 200 periods in the 4 -hour graph), below which the USD/JPY torque could re -test levels below 144.00. The latter should act as a key point, which if it breaks decisively, would deny the positive perspective and change the short -term bias in favor of the bassists.
Commercial War between the US and China Faqs
In general terms, “Trade War” is a commercial war, an economic conflict between two or more countries due to the extreme protectionism of one of the parties. It implies the creation of commercial barriers, such as tariffs, which are in counterbarreras, increasing import costs and, therefore, the cost of life.
An economic conflict between the United States (USA) and China began in early 2018, when President Donald Trump established commercial barriers against China, claiming unfair commercial practices and theft of intellectual property by the Asian giant. China took retaliation measures, imposing tariffs on multiple American products, such as cars and soybeans. The tensions climbed until the two countries signed the Phase one trade agreement between the US and China in January 2020. The agreement required structural reforms and other changes in China’s economic and commercial regime and intended to restore stability and confidence between the two nations. Coronavirus pandemia diverted the attention of the conflict. However, it is worth mentioning that President Joe Biden, who took office after Trump, kept the tariffs and even added some additional encumbrances.
Donald Trump’s return to the White House as the 47th US president has unleashed a new wave of tensions between the two countries. During the 2024 election campaign, Trump promised to impose 60% tariff particularly in investment, and directly feeding the inflation of the consumer price index.
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.
