- The Japanese Yen recovers positive traction after touching a minimum of more than a week against USD.
- The expectations that the BOJ will further increase interest rates continue to act as a tail wind for the JPY.
- The expectations of greater relief of politics by the Fed weaken the USD and weigh on the USD/JPY.
The Japanese Yen (JPY) touches a minimum of one week, around the 151.00 mark in front of his American counterpart during the Asian session on Monday, although the fall remains limited amid the expectations of a hard line box. In fact, investors have been valuing the possibility of more increases in interest rates on the part of the Boj, which pushed the performance of the Japanese government bonus at 10 years (JGB) of reference to its highest level since November 2009. Apart from this, the appearance of some sales of the US dollar (USD) acts as a wind against for the USD/JPY torque.
Meanwhile, the governor of the Boj, Kazuo Ueda, warned last week that the uncertainty about the tariff plans of US President Donald Trump and its impact on global economic perspectives require surveillance in the fixation of monetary policy. This, in turn, is braking the JPY bulls when opening new positions and providing some support to the USD/JPy pair. The operators also seem reluctant and choose to wait for the important macroeconomic releases of the US scheduled for the start of a new month, starting with the ISM manufacturing PMI later during the American session on Monday.
The Japanese Yen receives support from the expectations of a hard line box and the modest USD weakness
- The recent data in Japan showed solid economic growth and persistent inflation, which reaffirmed the bets that the Bank of Japan will increase rates even more and continue to support the Japanese yen.
- The Japanese media reported that the BOJ could face pressure to increase interest rates from the US if the White House concludes that JPY’s weakness is linked to the monetary policy of the Central Bank.
- The purchasing managers index (PMI) of Japan Jibun Bank was set at 49.0 for February, slightly above the preliminary reading of 48.9 and marking the smoother contraction in three months.
- The president of the USA, Donald Trump, confirmed his plans to impose tariffs on Canada and Mexico starting Tuesday and announced plans to double the 10% universal tariff on China imports.
- The US dollar struggles to capitalize on Friday’s strong movement towards a maximum of more than a week touched on reaction to the crucial US inflation data and exerts more pressure on the USD/JPY torque.
- A report published by the US Economic Analysis Office showed that the Personal Consumption Expenditure Price Index (PCE) dropped to 2.5% in January from 2.6% previous.
- Adding to this, the underlying PCE price index, which excludes volatile food and energy prices, increased 2.6% in annual terms during the reported month, lowering 2.9% in December.
- Investors have been valuing the possibility that the Federal Reserve resumes cuts in short -term indebtedness costs in June and see another rate cut in September.
- The operators now expect the publication of the USM manufacturing PMI of the US to obtain a new impulse later on Monday, although the attention is still focused on the US non -agricultural payrolls on Friday.
The USD/JPY faces rejection near the support converted into resistance of 151.00; It seems vulnerable
From a technical perspective, the USD/JPY torque stops in the recovery movement last week since its lowest level since October 2024 near the horizontal rupture point of 151.00, now turned into an obstacle. In addition, the oscillators in the daily chart, although they have been recovering from lower levels, still remain in negative territory. This, in turn, suggests that the path of lower resistance for cash prices remains down. Therefore, a subsequent fall, back to the 150.00 psychological brand, seems like a different possibility. Some additional sales below the region of 149.80-149.75 will be seen as a new trigger for the bearish operators and will drag at the time back to the 149.00 mark on the route to the area of 148.60-148.55, or the minimum of several months.
However, a sustained strength beyond the 151.00 mark could trigger a short coverage rally and raise the USD/JPY torque beyond the intermediate resistance of 151.70-151.75, towards the round figure of 152.00. The impulse could extend even more towards the very important simple mobile average (SMA) of 200 days, currently located near the region of 152.40. The latter should act as a key point, which if it is exceeded decisively, will suggest that cash prices have touched back and open the way for an additional short -term appreciation movement.
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.
