The bulls of the Japanese Yen seem reluctant, since bets for a delay in the rise in Boj rates compensate for commercial uncertainties

  • The Japanese Yen begins the new week with a tone off in the middle of mixed fundamental signals.
  • The decreasing optimism on a rapid commercial agreement between the US and China provides some support to the Yen Refugio.
  • The expectations that the BOJ could pause more rates of rates keep the JPY bulls out.

The Japanese Yen (JPY) oscillates in a narrow range during Monday’s Asian session and stops the recent setback from a maximum of several months reached in front of his US counterpart last week. The US Treasury Secretary, Scott Besent, did not support President Donald Trump’s statement that tariff conversations with China were underway. This maintains a limit to optimism about a rapid resolution of commercial tensions between the two largest economies in the world and provides some support to the refuge.

Meanwhile, the operators have delayed the expectations of an immediate rise in interest rates by the Bank of Japan (BOJ) due to the growing economic risks by US tariff aggressive by the Federal Reserve (FED). This keeps the US Dollar (USD) bulls on the defensive and also acts as a tail wind for the JPY of lower performance.

The Japanese Yen could receive support from the persistent uncertainties related to trade, bets for more rise in Boj rates in 2025

  • The US Treasury Secretary, Scott Besent, said Sunday that he didn’t know if US President Donald Trump had spoken with Chinese President Xi Jinping. Besent added that he had interactions with his Chinese counterparts last week, but did not mention tariffs.
  • In addition, China has repeatedly denied that commercial conversations are being carried out with the USA. This moderates the hopes of a de -escalation of commercial tensions between the two largest economies in the world and could support the Japanese and Japanese refuge at the beginning of a new week.
  • The Vice Minister of Finance of Japan for International Affairs and main diplomat of currencies, Atsushi Mimura, denied a media report that said that Besent had told the Japanese finance minister, Katsunobu Kato, at a meeting last week that a weak dollar and a strong JPY are desirable.
  • Meanwhile, Besent said in an X post on Saturday that he had very constructive conversations with his Japanese counterpart, feeding the hopes of an eventual commercial agreement between the US and Japan. This turns out to be another factor that acts as a tail wind for the JPY during the Asian session.
  • Despite high inflation, the Bank of Japan is expected to act with caution and pause more rates of rates amid concerns that the new US tariffs could reduce Japan GDP by 0.5%. It is anticipated that the BOJ keeps the rates without changes in your policy meeting this week.
  • However, inflation remains above the objective of 2% for the third consecutive year and large companies continue to offer significant salary increases this year. This gives Boj margin to harden its monetary policy in 2025, which supports the perspectives of a greater appreciation of the JPY.
  • In contrast, the operators are betting on the Federal Reserve will resume its cycle of feat cuts in June and will reduce indebtedness costs at a complete percentage point by the end of this year. This does not help the US dollar to capitalize on the rebound last week since a minimum of several years.
  • Meanwhile, North Korea confirmed on Monday that troops sent to fight for Russia in the war with Ukraine. In addition, the US Secretary of State, Marco Rubio, said that US could leave his attempts to mediate an agreement if Russia and Ukraine do not advance.
  • This keeps at stake the geopolitical risk premium, which, together with the divergent expectations of the Boj and Fed policy, suggests that the path of lower resistance for the JPY of lower performance is upward.

The USD/JPY could have difficulty capitalizing on the recovery of last week and facing strong resistance near the 144.35 region

A sustained movement beyond the simple mobile average (SMA) of 100 periods in the 4-hour graph will be seen as a key trigger for the USD/JPY bulls in the context of the break last week above the level of fibonacci recoil of 23.6% of the March-April fall. The oscillators in the 4 -hour graph show a positive traction, which suggests an intradic movement upwards, but the daily indicators have not yet confirmed a positive trend and the caution is justified. Therefore, any subsequent fortress beyond the 144.00 mark could face strong resistance near the region of 144.35, or the level of 38.2% of Fibonacci. However, some continuation purchases should pave the way for a significant short -term increase.

On the other hand, the 143.25 area, closely followed by the round figure of 143.00, now seems to protect the immediate fall. Any additional sliding could continue to attract some buyers at lower levels near the 142.60 or 23.6% Fibonacci area. This should help limit the fall near the support zone of 142.25. However, a convincing rupture below the latter, which leads to a subsequent break through the round figure of 142.00, could make the USD/JPY pair vulnerable to weakening even more towards the middle zone of 141.00, en route to the region of 141.10-141.00. The downward trajectory could extend even more towards the intermediate support near the 140.50 area and expose the minimum of several months, levels below the psychological brand of 140.00 reached last week.

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

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