- The USD/JPY softens around 144.00 while commercial conversations occupy the center of the stage.
- The United States and China try to restore commercial relations, benefiting the feeling of risk.
- Japan advances in his own conversations with the US, limiting the fall of Yen.
The Japanese Yen (JPY) stabilizes against the US dollar (USD) on Monday, while markets digest developments in commercial conversations between the US and China.
On Friday, Japan announced that he had achieved some progress in his conversations with the United States (USA), in the fifth round of commercial negotiations between the two nations.
However, Monday’s approach was in the conversations between the US and China in London, which remained the main engine of the feeling of risk for global actions and currencies.
The latest news from London reported that US President Donald Trump was considering raising export controls on certain assets of China in an effort to relieve the restrictions that have been pressing commercial relations between the US and China.
These developments had broader implications for the feeling of risk and the USD/JPY torque. For the YEN, considered a safe shelter, a more risk -aversive tone is seen as a threat. However, since Japan is also extending its negotiations with the US, the JPY falls against the USD has been limited.
With the USD/JPY currently quoting above the simple mobile average (SMA) of 20 days in 144.38, the psychological level of 144 is still critical for the short -term movement.
With the approach remaining in commercial negotiations and the feeling of broader risk, the USD/JPY is expected to react to any development related to international trade. If the conversations between the US and China generate optimism regarding the broader commercial relations between the US and other commercial partners, a change in the feeling of risk could favor the demand of the US dollar, adding additional pressure on the action of the USD/JPY price.
For the immediate movement, a break below the 20 -day SMA could open the door to the psychological support level of 144.00, with the next critical support layer resting in the minimum of May 27, 142.11.
In contrast, a clear retention above the psychological resistance in 145.00 could see the USD/JPY recover at the level of May 29, 146.29, with the next level of resistance in the simple mobile average (SMA) of 200 days, above 149.00.
USD/JPY DAILY GRAPH
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.
