- The Japanese Yen strengthens against USD for the second consecutive day on Wednesday.
- The perspectives of a greater normalization of politics by the BOJ continue to support the JPY.
- A softer American CPI raises bets for two Fed feat cuts in 2025, weighing on the USD and the USD/JPY.
The Japanese Yen (JPY) remains in a favorable position against his US counterpart for the second consecutive day on Wednesday and reacts little to the production price index (IPP) that was mostly online. The hard line comments of the Vice Governor of the Bank of Japan (Boj), Shinichi Uchida, on Tuesday, keep the door open for a greater normalization of politics and continue to act as a tail wind for the JPY. The US dollar (USD), on the other hand, remains weakened by the most soft consumption inflation figures on Tuesday, which raised the bets that the Federal Reserve (Fed) will cut interest rates at least twice this year. This is considered another factor that exerts downward pressure on the USD/JPy torque.
Meanwhile, the last optimism on a tariff truce between the US and China for 90 days continues to support market optimism. This could stop the operators of opening aggressive bullish bets around the jpy of safe refuge. However, divergent policy expectations between the BOJ and the Fed suggest that the way of lower resistance for the lower performance is up and supports the perspectives of a new downward movement for the USD/JPY torque. In the absence of relevant economic data that move the market from the US, the operators will take clues of the speeches of influential members of the FOMC. Apart from this, the deepest feeling of risk could provide some impulse to the currency pair.
The Japanese Yen receives some support from divergent policy expectations between the Boj and the Fed
- The data published on Wednesday showed that the production price index (IPP) of Japan rose 0.2% in April, and the annual rate stood at 4%, lowering 4.2% of the previous month. However, the Japanese Yen moves shortly after the data and receives support from the expectations of more rates of rates by the Bank of Japan.
- In fact, the vice governor of the Boj, Shinichi Uchida, reiterated on Tuesday that the Central Bank will continue to raise rates if the economy and prices improve as projected. It is expected that Japan’s economic growth will slow down around its potential before resuming moderate growth as foreign economies recover, Uchida added.
- On the other hand, the operators reduced their bets for a more aggressive policy relief by the Federal Reserve in the midst of the decrease in the fears of recession. However, investors are still valuing 56 basic points of fees of the FED fees this year, and the bets were reaffirmed by the inflation figures to consumption in the US published on Tuesday.
- The US Labor Statistics Office (BLS) reported that the general consumer price index (CPI) dropped to 2.3% year -on -year in April from 2.4% of the previous month. Meanwhile, the underlying IPC, which excludes volatile food and energy prices, rose 2.8% in annual terms, coinciding with consensus estimates.
- This keeps the US dollar depressed below its highest level since April 10 reached earlier this week, and exerts some downward pressure over the USD/JPY torque. However, optimism on the commercial agreement between the US and China could stop the operators of opening aggressive bullish bets around the jpy of safe refuge.
- The president of the USA, Donald Trump, said in an interview with Fox News that the relationship with China is excellent. This adds to the positive news of the tariff negotiations between the US and China during the weekend, where both countries agreed to pause the commercial war for 90 days and reduce reciprocal tariffs.
The USD/JPY technical configuration supports the prospects for the appearance of buyers in falls
From a technical perspective, the recent rupture through the simple mobile average (SMA) of 200 periods in the 4 -hour graph and the positive oscillators in the daily chart favor the upward operators. Therefore, any subsequent sliding below the 147.00 mark could still be seen as a purchase opportunity near the 146.60-146.55 area, which represents the level of fibonacci setback of 23.6% of the strong recovery since the minimum of the year reached in April. However, a convincing rupture below could cause some technical sales and drag to the USD/JPY torque towards the 146.00 mark to the region of 145.40 (level of 38.2% of Fibonacci) and the psychological brand of 145.00. This is closely followed by the area of ​​144,80-144.75, or the 200 periods SMA in the 4-hour graph, which, if it breaks decisively, would deny the positive bias in the short term.
On the contrary, the 147.65 zone now seems to act as an immediate obstacle, above which the USD/JPY torque could rise to the round figure of 148.00 en route to the region of 148.25-148.30 and beyond a maximum of a month, around the 148.65 area reached on Monday. Some purchases of continuation beyond the latter will be seen as a new trigger for the bullies and will raise cash prices beyond the 149.00 mark, towards the area of ​​149.65-149.70 and eventually towards the psychological brand of 150.00.
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.
