- The Japanese Yen begins the new week in a weaker tone, although the fall seems limited.
- The increase in geopolitical tensions and the expectations of an aggressive grocer should provide some support to the JPY.
- Operators could also choose to stay out before the risks of key events of this week’s central banks.
The Japanese Yen (JPY) slides down for the second consecutive day on Monday, pushing to the USD/JPy torque to the 144.75 area during the Asian session, although it lacks continuity. The expectations that the Bank of Japan (BOJ) could give up another rise in interest rates this year, together with a generally positive tone around the variable rental markets, undermine the jpy of safe refuge. However, investors seem convinced that the Central Bank will remain on the road to the normalization of policy amid increasing inflation.
This, together with the increase in geopolitical tensions in the Middle East, should help limit the deepest losses of the JPY. The operators also seem reluctant and choose to wait for the crucial decision of the BOJ on Tuesday to determine the next directional movement of the JPY. This week, investors will also take signs of the result of a two -day FOMC policy meeting on Wednesday, which will play a key role in influencing the short -term price dynamics of the US dollar (USD) and will provide a significant impulse to the USD/JPY torque.
The Japanese Yen Alcistas remain on the sidelines before the crucial decision of the Boj on Tuesday
- It is reported that the Bank of Japan is weighing a plan to reduce the rhythm of its Japanese government bond purchases (JGB), starting in April 2026. The proposal will be discussed at the two -day policy meeting, which begins this Monday, and is expected to receive the majority support of the members of the Board.
- Meanwhile, it is widely anticipated that the BOJ will maintain its reference rate at 0.5% at the end of the June policy meeting on Tuesday. However, those responsible for politics see slightly stronger inflation than they had anticipated earlier this year, which, in turn, could pave the way for future discussions about increases in interest rates.
- The growing acceptance of the market that the BOJ could press due to more strict monetary conditions, together with uncertainties related to trade and a greater climbing of geopolitical tensions in the Middle East, provides some support to the Japanese and safe refuge yen. This limits the upward movement of USD/JPY on Monday.
- Israel attacked Iran’s nuclear sites and key personnel last Friday, qualifying the operation as necessary to counteract an existential threat.
- Iran responded with hundreds of drones during the weekend and warned about more reprisals. This increases geopolitical uncertainty in the Middle East and favors JPY’s bulls.
- The US dollar, on the other hand, struggles to attract significant buyers and remains close to a minimum of three years reached last week in persistent uncertainties related to trade. In addition, bets that the Federal Reserve will further reduce indebted costs in 2025 act as a wind against the dollar.
- The operators expect with interest the crucial decisions of the BOJ and the FED on Tuesday and Wednesday, respectively, to obtain clues about the future perspectives of politics and a new impulse. However, the divergent expectations between the BOJ and the Fed suggest that the road of lower resistance for the USD/JPy torque is down.
The USD/JPY needs to overcome the barrier of the negotiation range near the level of 145.00 so that the bulls take control
From a technical perspective, the upward movement stops near the region of 144.75 or a resistance marked by the upper end of a negotiation range of several weeks. Some purchases of continuation, which lead to a later movement beyond the psychological level of 145.00, will be seen as a key trigger for the bullies and will raise the USD/JPY pair towards the monthly maximum, around the region of 145.45. The impulse could then allow cash prices to recover the round figure of 146.00 and extend even more towards the region of 146.25-146.30, or the peak of May 29.
On the contrary, the level of 144.00 now seems to protect the immediate fall and any posterior sliding is more likely to attract some purchases near the region of 143.55-143.50. A convincing rupture below the latter could drag to the USD/JPY torque towards the round figure of 143.00 en route to the minimum of Friday, around the region of 142.80-142.75 and the lower limit of the negotiation range, around the mid-142.00. The inability to defend the aforementioned support levels would establish the scenario for the resumption of the bearish trend from the monthly Mayor of May.
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.
