- The USD/JPY shoots in response to the growing fortress of the US dollar and the reduction of demand for Yen as a safe refuge.
- The United States imposes a 25% tariff on Japanese imports, which will enter into force on August 1.
- The USD/JPY’s upward perspective is strengthened above 146.00.
The USD/JPY shoots above 146.00 as commercial tensions between the US and Japan intensify and US yields increase.
The US dollar (USD) is gaining ground against the Japanese Yen (JPY) as a safe refuge on Monday, driven by the increase in treasure yields and escalation of commercial hostilities between Washington and Tokyo.
At the time of writing, the USD/JPY has won more than 1% to quote above the psychological level of 146.00, while Japan prepares for a 25% increase in all Japanese imports to the United States (USA) from August 1.
The president of the USA, Donald Trump, published a letter in his social truth account addressed to Japanese Prime Minister Ishiba Shigeru, informing him that his administration will begin to collect a 25% tariff to Japanese imports. Trump warned that he would increase his tariffs if Japan imposes retaliation tariffs on US products.
This follows the bilateral commercial conversations, which were deranged last month due to Japan’s reluctance to import US rice.
Although the main commercial negotiator of Japan, Ryosei Akazawa, in charge of commercial negotiations, had conversations with the US Secretary of Commerce, Howard Lutnick, during the weekend, there has not yet a significant progress.
In contrast, treasure yields in the US continued to increase, supported by the favorable figures of non -agricultural payroll (NFP) last week and the broader revaluation of interest rates.
The strongest labor market indicators have eliminated the possibility of rapid reduction of rates by the Federal Reserve (Fed), and market participants have shown greater appreciation for the US dollar compared to the low -performance Japanese and in Japanese.
The 10 -year American treasure bonus yield rose above 4.45% in continuous support to the dollar on Monday.
In marked contrast, the Japanese yen is still weak, since a moderate Japan Bank (Boj) and the weak internal economic indicators continue to apply pressure. The salary increases in the most recent review were disappointing and moderated the expectations that the BOJ would move towards the normalization of policy in the short term.
The technical panorama supports the USD/JPY bulls above 146.00
From a technical point of view, the USD/JPY continues to operate with a bullish bias, with the par convincingly the key resistance in 145.00
The support remains solid in the fibonacci setback of 23.6% of the fall from January to April in 144.70. Below that is the Simple Mobile (SMA) of 50 days about 144.58, which would bring to the matching number psychologically significant 144.00.
Resistance is also being formed in the region of the psychological level of 146.00.
Maintenance above this region would unleash additional appreciation around 147.00, unless commercial tensions are resolved.
USD/JPY DAILY GRAPH
The ascending movement is supported by an ascending line of trend since the minimum of April 139.89, indicating a solid higher minimum structure. The impulse indicators are also aligned with this vision, since the RSI has risen towards 58, showing a strengthening of the upward feeling while it still allows space for more profits before reaching overbill levels.
The key resistance is now at the FIBO level of 38.2% in 147.14, followed by the maximum of June 148.03 and the 50% setback level in 149.38.
While the torque is maintained above 144.37 and the ascending trend line, the short -term perspective remains bullish.
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.
