- The Japanese yen lacks an intra -firm direction on Wednesday in the midst of mixed fundamental signals.
- A positive risk tone and Japanese macroeconomic data limit the jpy of the safe refuge.
- The expectations of additional increases in BOJ rates in 2025 support JPY in the middle of a contained USD pricing action.
The Japanese Yen (JPY) struggles to gain significant traction on Wednesday and oscillates in a narrow negotiation range against his US counterpart during the Asian session in mixed signals. The president of the United States, Donald Trump, signed an order to relieve the impact of new tariffs on the automotive industry. The signals of more commercial agreements continue to support a positive risk tone. Apart from this, the disappointing internal data turns out to be key factors that limit the safe refuge JPY.
However, the operators seem reluctant to carry out aggressive bets and choose to wait for the result of a crucial policy meeting of the Japan Bank (BOJ) of two days that begins today. The BOJ is expected to announce its decision on Thursday and anticipate widely that it will maintain interest rates without changes in the middle of the growing risks to the fragile economy due to US tariffs. However, the signs of increasing inflation in Japan keep the door open for a greater normalization of the Boj’s policy, which could continue to act as a tail wind for the JPY.
The Japanese Yen operators stay out before the crucial box meeting that begins this Wednesday
- The president of the United States, Donald Trump, signed an order that will allow US car manufacturers to reduce the amount paid in import taxes on foreign pieces. In addition, White House officials said that the pieces made in Canada and Mexico that follow the Free Trade Rules of North America will not face tariffs.
- This adds to progress in commercial negotiations and hopes of more trade agreements, which continues to support a positive risk tone. In fact, US Treasury Secretary Scott Besent said at the beginning of this week that many of the main US business partners have made “very good” tariff proposals.
- Government data published earlier this Wednesday showed that Japan industrial production contracted 1.1% in March, much more than expected. In addition, Japan retail sales also remained below the estimates and grew by 3.1% year -on -year in March, acting as an obstacle to Japanese.
- The Bank of Japan begins its policy meeting today and will announce its decision on Thursday. The Central Bank is expected to act cautiously and pause the increases in additional interest rates amid the growing concerns that the new US tariffs could drastically slow Japan’s economic growth drastically.
- The expectations beyond the April meeting are divided into Japan mixed economic signals. However, the persistent inflationary pressures and the significant salary increases offered by large companies this year give the Boj margin to continue hardening their monetary policy this year.
- In contrast, the disappointing data of the US job and rotation offers survey (Jolts) of the United States and the US Conference Board Conference Board Index published on Tuesday strengthened the case for the resumption of the Federal Reserve Rate Cycle cycle in the coming months.
- In fact, the US Labor Statistics Office (BLS) reported that employment offers in the US fell dramatically, 7.19 million on the last day of March from 7,480 million (reviewed from 7.56 million) of open positions reported in the previous month. This reading was below the expectations of 7.5 million.
- In addition, the US Consumer Trust Index fell to 86.0 in April, or a minimum of almost five years, amid concerns about the possible economic repercussions of Trump’s tariffs. In addition, the current situation index and the expectations index fell to 133.5 and 54.4, respectively.
- The CME Fedwatch tool places the probabilities of a rate cut of 25 basic points of the Fed in June in 65%. The operators are also valuing up to 100 basic points in cuts for the end of the year, a key factor that keeps the US dollar near minimums of several years.
- The operators now expect the key US data on Wednesday: the ADP report on employment in the private sector, the advanced GDP of the first quarter and the Personal Consumption Expenditure Price Index (PCE). In addition, the US non -agricultural payroll report could provide information about the Fed policy perspective.
- Meanwhile, divergent policy expectations between the BOJ and the Fed should continue to act as a tail wind for the JPY of lower performance and limit the upstream/jpy pair.
USD/JPY bassists need to wait for a sustained break below the 142.00 mark before making new bets
From a technical perspective, the USD/JPY pair earlier this week fought to find acceptance above the simple mobile average (SMA) of 100 periods in the 4 -hour graph and faced rejection near the 144.00 mark. The subsequent fall and the negative oscillators in the schedules/day validate the negative perspective in the short term. That said, it will still be prudent to wait for sales below the 142.00 brand before positioning itself for deeper losses. Cash prices could then accelerate the fall to the middle zone of 141.00 en route to the region of 141.10-141.00. The descending trajectory could extend even more towards the intermediate support of 140.50 before the torque finally falls to a minimum of several months, levels below the psychological brand of 140.00 reached last week.
On the contrary, the region of 142.60-142.65 will probably act as an immediate obstacle, above which a short coverage movement could raise the USD/JPY torque beyond the 143.00 mark, towards the next relevant resistance near the 143,40-143.45 area. A sustained strength beyond the latter should allow cash prices to conquer the round figure of 144.00. The acceptance above the latter would suggest that the currency torque has formed a short term minimal and would pave the way for a significant rise.
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.
