- The Japanese yen remains weighed by the decreased probabilities of a rise in Boj rates in 2025.
- The fed upward perspective signs to the USD and provides additional support to the USD/JPY torque.
- Japan PMIS optimists keep JPY bassists away from making new bets and limit the main one.
The Japanese Yen (JPY) begins the new week with a weaker tone and falls to its lowest level since May 15 against a US dollar (USD) in general stronger during the Asian session. The Bank of Japan (BOJ) last week pointed out its preference for caution in the normalization of a monetary policy still lax, which forced investors to delay their expectations about the probable moment of the next rise in interest rates. Apart from this, the concerns that US tariffs of 25% on Japanese vehicles and 24% reciprocal taxes on other imports would impact the Japanese economy, turn out to be another factor that undermines JPY.
Meanwhile, the National Annual Consumer Price Index (CPI) of Japan remained well above the 2% target of the BOJ in May and gives the Central Bank more momentum to increase interest rates again in the coming months. Adding to this, the best publication than expected of the PMI of Japan earlier on Monday supports the case for more rise in the Boj. In addition, the risk of a higher escalation of geopolitical tensions in the Middle East, following the American bombardment of key nuclear sites in Iran on Sunday, could benefit the relative safe status of refuge of the JPY. This could contribute even more to limit the upstream/jpy rise.
Japanese Yen Alcistas remain on the middle of mixed fundamental signals
- The Bank of Japan decided last week to reduce the rhythm of decrease in its bond purchases from fiscal year 2026. In addition, the gloomy economic perspective and concerns about the possible economic repercussions of the US trade tariffs suggest that the BOJ could give up increase the interest rates in 2025.
- The data published on Friday showed that the underlying inflation of Japan remained above the 2% target of the Central Bank for more than three years and reached a maximum of more than two years in May. This keeps the door open for more rates of rates by the Boj, although it fails to boost the Japanese yen.
- In addition, the purchasing managers index (PMI) of the Jibun Bank showed on Monday that Japan’s manufacturing re -entered the first time expansion territory since May 2024. The manufacturing PMI sharply rose 49.4 seen in the month before 50.4 in June.
- Adding to this, the indicator for the services sector rose to 51.5 during the month reported from 51.0 in May, while the compound PMI advanced to 51.4 in June from 50.2 in May. This was the third consecutive month of growth in the activity of the private sector and the fastest rate since February.
- Meanwhile, the Federal Reserve projected two rate cuts this year. However, Fed officials forecast only a 25 basic points cut in each of 2026 and 2027 amid concerns that Trump administration tariffs could increase consumer prices, which aims at the US dollar.
- In the Geopolitical Front, the US joined Israel in military action against Iran and bombed three nuclear sites on Sunday. The US launched 75 guided precision ammissions, including more than two dozen Tomahawk missiles, and more than 125 military aircraft in the operation.
- In addition, US Secretary of Defense, Pete Hegesh, warned Iran against continuing with past threats of reprisals. Adding to this, Vice President JD Vance said that the US was not at war with Iran, but with his nuclear program. Investors now expect Iran’s response to US attacks.
The USD/JPY could extend the positive movement once the 100 -day SMA obstacle is exceeded
From a technical perspective, the USD/JPY torque needs to overcome the single mobile average (SMA) barrier of 100 days around the 146.80 region so that the bulls maintain the short -term control. Some additional purchases beyond the 147.00 brand will confirm a positive perspective and will raise cash prices towards the intermediate obstacle of 147.40-147.45 en route to the round figure of 148.00 and the region of 148.65, or the monthly maximum of May.
On the contrary, any corrective setback below the 146.00 brand is more likely to attract new buyers and find a decent support near the area of ​​145.30-145.25. This, in turn, should help limit the fall of the USD/JPY torque near the psychological brand of 145.00. The latter should act as a solid base for cash prices, which if it is broken decisively could cause some technical sales and change short -term bias in favor of bassists.
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.
