- The Japanese Yen attracts new buyers on Thursday in the midst of growing commercial tensions.
- The bets that the BOJ will continue to upload rates offer additional support to the JPY.
- A modest USD setback from a maximum of several weeks also exerted pressure on the USD/JPY.
The Japanese Yen (JPY) advances in front of his American counterpart during Thursday’s Asian session and reverses a large part of the losses of the previous day. The feeling of global risk is affected in reaction to the new tariffs of US President Donald Trump about imported cars. This occurs before the imminent advertisement of Trump reciprocal tariffs next week and offers support to the safe refuge jpy. In addition, the feeling of a hard line around the policy perspective of the Bank of Japan (BOJ), backed by strong salary growth during the third consecutive year, further reinforces JPY.
Meanwhile, the forecast of the Federal Reserve (FED) of two rate cuts of 25 basic points in 2025 marks a great divergence compared to the hard line expectations of the BOJ. This could result in greater narrowing of the rate differential between the US and Japan, which contributes to direct flows to the JPY of lower performance. Apart from this, a modest recoil of the US dollar (USD) from a maximum of three weeks drags to the USD/JPY torque closer to the psychological level of 150.00. The operators now expect the macroeconomic data of the US – the final impression of the GDP of the fourth quarter, the initial applications of weekly unemployment subsidy and the sales of pending homes – to obtain a new impulse.
The Japanese Yen attracts safe refuge flows as Trump’s new tariffs weigh on the feeling of investors
- The president of the USA, Donald Trump, announced on Wednesday that he will impose 25% tariffs to all imported vehicles and car parts manufactured abroad as of April 2, expanding the global commercial war. This adds to the imminent reciprocal tariffs against at least 15 countries next week and weighs on the feeling of investors, increasing the demand for the Japanese and safe refuge yen.
- Investors seem convinced that the Bank of Japan will continue to raise interest rates amid the expectations that strong salary growth will support consumption and filter into broader inflation trends. In addition, the new member of the Boj Board, Junko Koeda, said on Wednesday that several indicators show that underlying inflation moves around 2% sustainably.
- Meanwhile, the Federal Reserve reviewed its growth perspective in the midst of uncertainty about the impact of Trump’s commercial policies and pointed out that it would deliver two interest rate cuts of 25 basic points by the end of this year. This does not help the US dollar to capitalize on their recent upward movement towards a maximum of three weeks reached during the Asian session on Thursday.
- Chicago Fed president Austan Goolsbee said in an interview with the Financial Times (FT) on Wednesday that he could take more time than the next rate cut arrives due to economic uncertainty. However, Goolsbee believes that indebtedness costs will be much lower in 12-18 months from now on, although the wait and see is the right approach.
- Separately, the president of the Fed of Minneapolis, Neel Kashkari, reiterated that “we have made a lot of progress to reduce inflation, but there is still more work to do.” Kashkari acknowledged that the labor market has remained strong and that the uncertainty of politics complicates the work of the Fed.
- The president of the Fed of St. Louis, Alberto Musalem, said that the risks that inflation stagnate above 2% or increase in the short term seem to have increased. If the labor market remains strong and the effects of second round tariffs become evident, the US Central Bank may need to maintain the highest rates for a longer time or consider a more restrictive policy, Musalem added.
- The US Department of Commerce reported Wednesday that the requests for lasting goods increased 0.9% in February compared to the revised increase of 3.3% of the previous month. In addition, basic durable goods, which exclude the volatile transport sector, increased 0.7%. The readings were better than consensus estimates and provided a slight impulse to the USD index.
- The US economic agenda on Thursday includes the publication of the final printing of the GDP of the fourth quarter, the usual data of initial applications of weekly unemployment subsidy and the sales of pending housing. However, the approach will remain focused on the US Personal Consumption Expenditure Index (PCE) on Friday, which could provide some clues on the Path of Fed rates cuts and influence the USD price dynamics.
The technical configuration of the USD/JPY supports the prospects for the appearance of buyers in the fall at lower levels
From a technical perspective, the inability of the USD/JPY torque to build on the recent impulse of rupture above the simple mobile average (SMA) of 200 periods in the 4 -hour graph and the failure near the level of 151.00 on Tuesday require caution for the bulls. That said, the oscillators in the daily chart have begun to gain positive traction and support the prospects for the appearance of some buyers in the fall. Therefore, any additional weakness below the psychological level of 150.00 could find some support near the 149.55 area. However, some continuation sales could make cash prices vulnerable to accelerating the fall towards the level of 149.00 on a route to the support of 148.75-148.70. The latter coincides with the 100 periods SMA in the 4 -hour graph, which if it breaks could change the bias in favor of the bassists.
On the contrary, any positive movement beyond the region of 150.50-150.60 could continue to face obstacles near the level of 151.00. This is followed by the monthly minimum, around the region of 151.30, which if it is exceeded will establish the scenario for an extension of the recent recovery from a minimum of several months. The subsequent movement should allow the USD/JPY to aim to recover the round figure of 152.00.
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.
