- The Japanese Yen stopped a three -day streak against the USD on Wednesday.
- Optimism in commercial conversations between the US and China looks like a weight for the safe refuge jpy.
- A modest Usd rebound supports the USD/JPY before the FOMC policy decision.
The Japanese Yen (JPY) weakens on all fronts during the Asian session on Wednesday, since optimism about commercial conversations between the US and China looks like a factor that undermines the demand for traditional safe refuge assets. This adds to the uncertainty about the possible rhythm and temporality of future increases in rates by the Bank of Japan (BOJ), which is considered to weigh on the JPY. This, together with a modest rebound of the US dollar (USD), helps the USD/JPY to earn some positive traction and break a three -day run streak, playing a minimum of almost a week on Tuesday.
However, investors seem convinced that the BOJ could raise its perspective, depending on the result of commercial conversations between the US and Japan, and increase interest rates again amid signals from increasing inflation in Japan, which could act as a tail wind for the JPY. In addition, USD bulls could refrain from aggressive bets and choose to wait for more clues about the federal reserve rate cuts (FED). This, in turn, could limit any significant climb to the USD/JPY torque while operators expect the result of a FOMC policy meeting later today.
The Japanese Yen is undermined by the decrease in the demand for safe refuge amid the hopes of a commercial agreement between the US and China
- The US Treasury Secretary, Scott Besent, together with the US trade representative, Jamieson Greer, will travel to Switzerland later this week for commercial conversations with the Vice Primer Chinese Minister He Lifeng. This happens after Besent said Tuesday that the Trump administration could announce trade agreements with some of the largest commercial partners as soon as this week and increase investor confidence.
- This, in turn, is considered that the demand for traditional safe refuge assets and exerts pressure on the Japanese Yen during the Asian session on Wednesday. The US dollar, on the other hand, progresses after a three -day run streak in the middle of a certain repositioning before the crucial decision of the FOMC and raises the USD/JPY torque above the level of 143.00.
- The Federal Reserve is expected to maintain interest rates without changes at the end of a two -day policy meeting. Therefore, the market approach will be in the policy statement that accompanies it. In addition to this, the comments of the president of the FED, Jerome Powell, at the press conference after the meeting will be examined in search of clues on the future path of feat cuts, which will boost the USD in the short term.
- Meanwhile, the Bank of Japan reiterated last week that remains committed to increasing rates even more if the economy and prices move in line with their forecasts. In addition, the expectations that sustained salary increases will boost consumer spending and inflation in Japan keep the door open to a greater normalization of policy by the boxwood and increases in interest rates by the end of this year.
- Meanwhile, a Kremlin spokesman warned that an appropriate response will be given immediately if Ukraine does not stop the fire. Adding to this, Israel’s security cabinet approved a plan to expand the military offensive in Gaza and take gradual control of the territory. This maintains the geopolitical risks at stake and should limit the deepest losses of the JPY.
The USD/JPY could face a strong barrier near the area of 143.55-143.60 and remain below the level of 144.00
From a technical perspective, the failure of last week near the simple mobile average (SMA) of 200 periods in the 4 -hour graph and the subsequent fall favor the bearish operators. In addition, the oscillators in daily/hour graphics remain in negative territory, suggesting that the lower resistance path for the USD/JPy torque is still down. Therefore, any additional movement could still be seen as a sales opportunity near the region of 143.55-143.60. This, in turn, should limit cash prices near the level of 144.00. This is followed by the supply zone of 144.25-144.30, which, if it is clear decisively, could trigger a short coverage rally and raise cash prices at the psychological level of 145.00.
On the contrary, the 142.35 area, or the weekly minimum, now seems to protect the immediate fall for the USD/JPY torque before the level of 142.00. A convincing rupture below the latter could make cash prices vulnerable to accelerating the fall towards the following relevant support near the region of 141.60-141.55 en route to the round figure of 141.00.
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.
