- The Japanese Yen is undermined by the decrease in the demand for safe refuge, although he lacks continuation.
- The expectations of rise in the Boj’s rates should limit any significant fall of the JPY in persistent geopolitical risks.
- The Fed Dovish expectations keep the USD bulls on the defensive and limit the USD/JPY torque profits.
The Japanese Yen (JPY) weakens on all fronts on Tuesday, helping the USD/JPy torque to reverse the fall of the day before more than a minimum of one week and get back to the mid -145.00 during the Asian session. A surprising reduction of the Credit Credit qualification of the US government on Friday seemed to have a modest impact on the feeling of global risk. This is evident in a generally positive tone around shares markets, which is considered a key factor that undermines the demand of the safe refuge JPY.
Any significant fall of the JPY, however, seems elusive following the growing acceptance that the Bank of Japan (BOJ) will raise interest rates in 2025. In contrast, the Federal Reserve (Fed) is expected to further reduce the indebted costs in the medium of relief signals of inflationary pressures and a slow growth panorama. This, in turn, could keep any attempt at upward movement of the US dollar (USD) at bay and act as a tail wind for the lower performance JPY, which, in turn, should limit the USD/JPY torque.
The bulls of Japanese are cautious in the midst of market optimism; The downward potential seems limited
- Investors overlooked the reduction of Moody’s of the US sovereign credit rating to “AA1” from “AAA” on Friday in the midst of the growing commercial optimism, which, in turn, causes new sales around the Japanese Yen of safe refuge during the Asian session on Tuesday.
- The US and China agreed to significantly reduce tariffs and started a 90 -day break to finish a broader agreement, which marked the de -flag of a disruptive confrontation between the two largest economies in the world and improved the feeling of global risk.
- The vice governor of the Bank of Japan, Shinichi Uchida, said on Monday that the underlying inflation of Japan will probably accelerate after a slowdown period and that the Central Bank will continue to raise interest rates if the economy and prices improve how it is projected.
- In addition, the summary of opinions of the BOJ of the last meeting revealed that those responsible for the policy have not renounced to increase the interest rates further, and some members of the Board saw margin to resume rates increases if the developments on the US tariffs are stabilized.
- The US Consumer Price Index (ICC) and the Production Price Index (PPI) published last week pointed to inflation relief signals, while the disappointing US retail sales data increased the USA.
- Two Fed officials – the president of the Fed in New York, John Williams, and the president of the Fed of Atlanta, Raphael Bostic – suggested on Monday that those responsible for the policy could not reduce interest rates before September due to an unclear economic panorama.
- In addition, the vice president of the FED, Philip Jefferson, also supported a waiting approach and warned that temporary price increases become sustained inflation. However, investors are still valuing two cuts of 25 basic points for the end of the year.
- Trump announced on his social truth platform that Russia and Ukraine have agreed to begin negotiations towards a high fire immediately and emphasized that the conditions of bilateral conversations will be negotiated directly between the two parties.
- The Israeli army announced that extensive land operations had begun in an extended offensive against Hamas and issued evacuation orders to people in the southern city of Khan Yunis, the second largest city in Gaza.
- This maintains the geopolitical risks at stake and should limit any significant depreciation of the JPY, which justifies caution before making new bullish bets around the USD/JPy torque and confirms that a one -week a week has come to an end.
The USD/JPY will probably attract new sellers at higher levels and remain limited near the level of 146.00
From a technical perspective, the acceptance below the level of fibonacci (fibo.) Of 38.2% of the amount of April-Mayo and the negative oscillators in the schedules in the schedules favor the bassists of the USD/JPY. Therefore, any subsequent rise movement could still be seen as an opportunity for sale and remain limited before the round figure of 146.00. However, a sustained strength beyond the latter could trigger a short coverage movement and raise cash prices to the 146.60 area, or the 23.6% FIBO level., En route to the level of 147.00.
On the contrary, the area of ​​144.65, or below a minimum of one week touched on Monday, now seems to protect immediate decline. This is closely followed by the confluence of 144.30-144.25, which includes the simple mobile average (SMA) of 200 periods in the 4-hour graph and the 50%setback level. A convincing rupture below will be seen as a new trigger for bassists and will drag the USD/JPY torne below the level of 144.00, towards the following relevant support near the region of 143.75-143.70.
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.
