- The Japanese Yen attracts some sellers intradia on Tuesday, although the downward risk remains limited.
- Uncertainties related to commerce and geopolitical risks help to limit the fall of Japanese Yen, safe refuge.
- Divergent expectations between the BOJ and the Fed contribute to limit the USD/JPY before the FOMC meeting.
The Japanese Yen (JPY) went back to his American counterpart during the Asian session on Tuesday, although he lacks continuation sales. Despite the moderate guide of the Bank of Japan (BOJ) last Thursday, inflation in Japan and the perspectives of sustained salary increases keep the door open for greater hardening by the Central Bank. Apart from this, the uncertainty about the commercial policies of US President Donald Trump and the increase in geopolitical tensions continue to act as a tail wind for the Japanese Yen, an active refuge.
Meanwhile, the most aggressive rate cuts from the Federal Reserve (FED) fail to help the US dollar (USD) attract significant buyers and contribute to limit the upstream of the USD/JPY torque. The operators also seem reluctant and choose to wait for more clues about the PCIUSE OF THE FED policy before positioning themselves for the next phase of a directional movement. Therefore, the approach will continue in the result of a two -day FOMC meeting that begins this Tuesday, which will boost the USD and provide a new momentum.
Japanese Yen Alcistas have the advantage in the midst of a sustained demand for sure shelter
- The Bank of Japan adopted a cautious tone last week by cutting its growth and inflation forecasts, forcing investors to reduce their bets for the next rate increase in June or July. However, the Central Bank reiterated that it is still committed to increasing rates if the economy and prices move in line with its forecasts.
- The erratic commercial policies of US President Donald Trump eclipsan the optimism generated by relaxation signals in commercial tensions between the US and China and keep investors in suspense. In fact, Trump announced on Sunday a 100% tariff over all films produced in foreign countries. In addition, geopolitical risks support Japanese for sure refuge.
- Russia’s Ministry of Defense said Ukraine launched a drone attack aimed at Moscow for the second consecutive night on Monday. This follows reports of new attempts to cross the Kursk region of Russia. This happens days after the Russian President Vladimir Putin declared a high fire fire from May 8 to 10.
- In addition, Israel attacked goals in Yemen in response to the ballistic missile attacks of the hutis backed by Iran that hit the main Israel airport on Sunday. The Hutis warned Sunday that they could attack again and impose an integral air block over Israel by repeatedly attacking airports.
- Meanwhile, Trump hinted at possible commercial agreements with certain countries as soon as this week and also pointed out that he is open to reduce the huge tariffs imposed on China. In addition, the China Ministry of Commerce said last Friday that it was evaluating the possibility of commercial conversations with the USA.
- In the front of the economic data, the Survey of the Supply Management Institute (ISM) showed on Monday that the growth in the US services sector was accelerated in April. In addition, the signs of an still resistant US labor market help to relieve concerns about a recession in the US and act as a tail wind for the US dollar.
- However, the operators seem reluctant to carry out aggressive bets and choose to stay out before a two -day FOMC policy meeting that begins this Tuesday. Investors will look for new clues on the future path of feat cuts of the Fed, which, in turn, will influence the USD and the USD/JPY torque.
The USD/JPY could have difficulty capitalizing on any recovery attempt beyond 144.00
From a technical perspective, the USD/JPY pair last week had difficulty finding acceptance above the level of fibonacci setback of 50% of the March-April fall and faced a rejection near the simple mobile average (SMA) of 200 periods in the 4-hour graph. The subsequent fall and the negative oscillators in the daily/hour graphics suggest that the path of lower resistance for cash prices is down. Therefore, any recovery attempt above the 144.00 brand could still be seen as an sales opportunity near the supply zone of 144.25-144.30. However, a sustained strength beyond the latter could trigger a short coverage rally and allow cash prices to recover the 145.00 psychological brand.
On the other hand, the weakness below the minimum of the Asian session, around the 143,5-143.50 area, has the potential to drag the USD/JPY torque towards the intermediate support of 143.30 on the route to the 143.00 mark. The following relevant support is located near the region of 142.65, which if it breaks in a decisive way would expose the level of 142.00 before the currency pair finally falls to the area of ​​141.60-141.55 and the round figure of 141.00.
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.
