- The USD/JPY benefits from performance differentials between the US and Japan, pushing prices above 147.00.
- Japan’s economy is still at risk after Trump threatened with a 25% tariff to all Japanese imports from August 1.
- The USD/JPY bulls push the relative force index (RSI) up, pointing out an increase in the bullish impulse.
The US dollar (USD) is quoted with confidence in front of the Japanese Yen (JPY) on Friday, since the yield differentials and tariff risks continue to weigh on the YEN, considered safe refuge.
At the time of writing, the USD/JPY continues to quote over 147.00 with the next psychological level of 148.00 in view.
Both Japan and the United States operate under a dual mandate in monetary policy. However, the priorities of their respective central banks differ significantly.
The US Federal Reserve (Fed), which currently maintains its reference interest rates between 4.25% and 4.50%, focuses on restoring price stability. By maintaining high rates for a prolonged period, the Fed seeks to reduce inflation to its 2%goal.
Meanwhile, the Bank of Japan (BOJ) continues to operate in an environment of low rates to stimulate economic growth. With its reference rate even at 0.50%, the wide gap in interest rates between the two economies has continued to attract investors to the US dollar, pushing the USD/JPy up.
Tariff concerns are adding more pressure. Japan faces 25% tariffs on car exports to the US and 50% to steel and aluminum, with the copper that will be added to the list in August. As Tokyo rushes to ensure a commercial agreement before a possible 25% tariff to all Japanese imports, the USD/JPY is still increasing.
The USD/JPY fights resistance at 147.00 while the bullish impulse supports the upward movement
The USD/JPY pair is currently quoted just above the 38.2% fibonacci recoil level in 147.14, a key technical area derived from the maximum of January 158.88 at least April 139.89.
Although a complete break has not yet been confirmed, the torque shows a strong ascending impulse, backed by consecutive bullish candles. The USD/JPY price action currently remains above the simple mobile (SMA) of 10 days and 50 days, providing additional support in 145.31 and 144.79, respectively.
This positioning reflects a short -term trend in strengthening, although the resistance zone between 147.14 and 148.03 remains critical.
A clear daily closure above this range would strengthen the upward case, opening the way to the 50% Fibonacci level in 149.38. Meanwhile, the Relative Force Index (RSI) is 62, suggesting a continuous bullish potential without entering over the territory.
USD/JPY DAILY GRAPH
Japanese – frequent questions
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.
