- The Japanese Yen begins the new week with a moderate tone amid mixed fundamental signals.
- A positive risk tone supports the JPY, although the expectations of a Hawkish Bal limit the loss.
- The operators also seem reluctant to the crucial policy decisions of the BOJ and the Fed later this week.
The Japanese Yen (JPY) ranges from warm profits/minor losses against his American counterpart during Monday’s Asian session in mixed fundamental signals. The optimism led by China’s stimulus measures announced during the weekend is evident in a generally positive tone in Asian shares markets. This, in turn, is considered a key factor that undermines the jpy of safe refuge.
Any significant depreciation of the JPY, however, remains elusive following the divergent policy expectations between the Federal Reserve (Fed) and the Bank of Japan (BOJ). In addition, the geopolitical risks and concerns about the economic repercussions of the tariffs of US President Donald Trump support the JPY. Apart from this, the underlying bearish feeling around the US dollar (USD) should limit the USD/JPY torque.
Operators could also refrain from aggressive directional bets and choose to stay out before the key risks of this week’s central banks: BOJ and Fed’s policy decisions on Wednesday. This justifies the caution for the bassists of the JPY and the position for an extension of the recent rebound of the USD/JPY torque from a minimum of several months, around the 146.55-146.50 area played last Tuesday.
The Japanese yen continues to receive support from betting on the rises of the Boj
- The China State Council announced a special action plan on Sunday aimed at stimulating internal consumption and introduced measures to increase household income. In addition, Shenzhen, in China, relaxed its loan policies from the Housing Fund to stimulate the real estate market and eliminate excess. This, in turn, increases the confidence of investors and undermines the Japanese and safe shelter during Monday’s Asian session.
- The results of the annual spring labor negotiations of Japan, which concluded on Friday, showed that companies offered an average salary increase greater than 5% at least for the second consecutive year to help workers deal with inflation and address labor shortage. The highest wages are expected to promote consumer spending and contribute to the increase in inflation, which gives the Bank of Japan a new reason to continue raising interest rates.
- Meanwhile, operators continue to increase their bets that the Federal Reserve will have to lower interest rates several times this year due to the growing possibility of an economic recession due to the commercial tariffs of US President Donald Trump. The expectations were reaffirmed by the surveys of the University of Michigan on Friday, which showed that the consumer’s feeling index collapsed to a minimum of almost 2 and a half years in March.
- This adds to the softest inflation figures in the US published last week and signs of a cooling in the labor market, which suggests that the US Central Bank could resume its policy relaxation cycle in June. In addition, market participants are currently valuing the possibility of two rates of 25 basic points of the FED, each in the monetary policy meetings of July and October, which keeps the US dollar depressed about a minimum of several months.
- The leader of the hutis, Abdul Malik al-Houthi, said Sunday that his militants would point to US ships in the Red Sea while the US continues his attacks in Yemen. This occurs a day after the mortal American air attacks, that the Ministry of Health controlled by the Hutis said they killed at least 53 people. In response, the US Secretary of Defense said on Sunday that the US will continue to attack Yemen’s hutis until they stop the attacks on navigation.
- According to Palestinian media, an attack by Israeli dron on Saturday in northern Gaza killed at least nine people, including three journalists. The Israeli army said their forces have intervened to frustrate threats of terrorists who approach their troops or plant bombs since the high the fire of January 19 entered into force. The Israeli army said that six men, identified as members of the armed wings of Hamas, were killed in the attack.
- The operators now wait for the US economic agenda, which includes the publication of monthly retail sales and the manufacturing index of the New York state, to obtain some impulse later during the American session. However, the approach will remain focused on the crucial decision of the BOJ on Wednesday. This, together with the results of a two -day FOMC meeting, should provide a new directional impulse to the USD/JPY torque.
USD/JPY struggles to find acceptance above the level of 149.00
From a technical perspective, the recent repeated failures to find acceptance above the level of 149.00 and the negative oscillators in the daily chart favor the bearish operators. However, a sustained strength beyond that level, which leads to a break through the maximum of last week around the 149.20 zone, could trigger a short coverage rally and raise the USD/JPY to the USD/JPY torque towards the psychological level of 150.00. The impulse could extend even more towards the area of ​​150.65-150.70 en route to the level of 151.00 and the monthly peak, around the region of 151.30.
On the contrary, the 148.25 area could protect immediate decline before the level of 148.00. Some additional sales below the horizontal zone of 147.75-147.70 could make the USD/JPY pair vulnerable to accelerate the fall towards the level of 147.00 before eventually falling towards the region of 146.55-146.50 or the lowest level since October touched last week. A convincing rupture below the latter will be seen as a new trigger for bassists and will pave the way for more losses.
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.
