- The Japanese yen cuts a two -day streak against the USD and recovers even more than the weekly minimum.
- Concerns about Trump’s commercial tariffs and the expectations of a more aggressive Boj continue to act as a tail wind for the JPY.
- Fed fees cut bets keep the USD about a minimum of several months and contribute to limit the USD/JPY rise.
The Japanese Yen (JPY) rose slightly in front of his American counterpart during Thursday’s Asian session and moves away from the weekly minimum touched the day before. The chaotic implementation of the tariffs of US President Donald Trump and its impact on the global economy could continue to promote JPY’s demand as a safe refuge. In addition, the increase in bets that the Bank of Japan (BOJ) will continue to raise interest rates in the middle of increasing inflation in Japan supports the JPY.
Meanwhile, the expectations of a more aggressive BOJ continue to support the recent increase in the yields of Japanese government bonds (JGB). The reduction resulting from the rate differential between Japan and other countries acts further as a tail wind for the JPY, which offers lower yields. The US dollar (USD), on the other hand, remains close to a minimum of several months amid the expectations that the Federal Reserve (Fed) will cut the rates several times this year. This, in turn, helps to limit the Usd/JPy pair.
The Japanese yen receives support from the growing commercial tensions and the upload bets of the Boj
- The 25% tariff of US President Donald Trump over all imports of steel and aluminum entered into force on Wednesday. Trump also threatened to respond to any countermelted announced by the European Union and Canada.
- Trump repeated his warning to reveal “reciprocal” tariffs next month about countries around the world, feeding concerns about a greater climbing of a commercial war and providing support to the Japanese and traditionally considered a safe refuge.
- Japanese companies agreed significant salary increases for the third consecutive year to help workers deal with inflation and address labor shortages. The highest wages are expected to promote consumer spending and contribute to the increase in inflation.
- This potential gives the Bank of Japan more margin to make additional increases in interest rates this year. This, in turn, maintains the 10 -year Japanese government bonus performance near its highest levels from the 2008 global financial crisis.
- Meanwhile, the governor of the Boj, Kazuo Ueda, said they have no immediate plans to intervene in the bond market and said that it is natural that long -term rates move in a way that reflects the market’s perspective on the policy rate.
- The operators increase their bets that the Federal Reserve will have to lower interest rates this year more than expected amid the growing possibility of an economic recession due to the aggressive Trump administration policies.
- The expectations were reaffirmed by the data published on Wednesday, which showed that the Consumer Price Index (CPI) general of the United States rose less than expected, 2.8% in annual terms in February, below 3% of the previous month.
- Additional details of the report revealed that the underlying IPC, which excludes volatile food and energy prices, decreased from the 3.3% increase in January to 3.1% interannual during the month reported. Reading was below 3.2% anticipated.
- The operators now expect the publication of the US Production Price Index (IPP) for a new impulse later during the early American session. However, the fundamental background seems to bow in favor of the bassists of the USD/JPY.
The USD/JPY could re -test the minimum of several months once the level of 148.00 is decisively broken
From a technical perspective, the lack of acceptance during the night above the round level of 149.00 and the subsequent setback validate the negative perspective for the USD/JPY torque. In addition, the oscillators in the daily chart are deeply maintained in bearish territory and are still far from being in the overall area. This, in turn, suggests that the path of lower resistance for cash prices remains down. Therefore, some continuation sales below the level of 148.00 could expose the following relevant support near the region of 147.25-147.20 before the torque descends even more below the level of 147.00, towards a new test of the minimum of several months, around the area of ​​146.55-146.50 touched on Tuesday.
On the positive side, the 148.60-148.70 area now seems to act as an immediate obstacle before the level of 149.00 and the maximum of the previous night, around the region of 149.20. A sustained force beyond the latter could cause a short coverage rally and allow the USD/JPY to recover the psychological level of 150.00. The impulse could extend even more towards the horizontal barrier of 150.55-150.60 en route to the round level of 151.00 and the monthly maximum, around the area of ​​151.30.
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.
