The Japanese yen quotes with a negative bias against a USD in recovery; The bullish bias is maintained

  • The Japanese Yen is undermined by the decrease in the demand for safe refuge in a positive risk tone.
  • Concerns about Trump’s tariffs and hopes of a commercial agreement between the US and Japan could limit the losses of the JPY.
  • Divergent policy expectations between the BOJ and the Fed should contribute to limit the USD/JPY torque.

The Japanese Yen (JPY) goes back during the Asian session on Tuesday, which, along with a modest rebound of the US dollar (USD), raises the USD/JPY torque closer to 143.00. The suspension of tariffs of the president of the US, Donald Trump, on electronic key consumption products and the signal that could temporarily exempt the automotive industry of the taxes of 25% continue to support the optimistic mood of the market. This, in turn, is considered that the demand for traditional assets of safe refuge, including JPY undermines.

However, the commercial war between the US and China, which is quickly intensifying, and persistent concerns about the possible economic repercussions of Trump’s disruptive tariffs should maintain a limit in market optimism. Meanwhile, the expectations that the Bank of Japan (BOJ) will continue to increase interest rates mark great divergence compared to bets for a more aggressive loosening of politics by the Federal Reserve (Fed). This, together with the hopes of a commercial agreement between the US and Japan, should limit the losses of the JPY of lower performance.

The bulls of the Japanese and become cautious in the midst of market optimism; The downward potential seems limited

  • On Monday, US President Donald Trump said he was considering possible exemptions for the 25%tariff industry, since automotive companies need a little time to make the transition to parts made in the US in the US exempt from Trump punitive reciprocal tariffs.
  • In addition, the rest of the world will be awarded a 90 -day relief on additional tariffs beyond the new 10%tariffs. However, Trump said the exemptions were only temporary and added that he would reveal tariffs about imported semiconductors next week. Trump also threatened to impose tariffs on pharmaceutical products in the not too distant future and maintained 145% levies on Chinese imports.
  • Investors reduced their bets due to early increases in interest rates on the part of the Bank of Japan due to the growing uncertainty about US tariff policy. However, the BOJ is expected to increase the policy rate in the midst of the increase in internal prices and wages. In contrast, markets have been valuing the possibility that the Federal Reserve soon resumes its cycle of feat cuts in the middle of an economic deceleration driven by tariffs in the US.
  • The governor of the Fed, Christopher Waller, said that the Trump administration tariffs represented a significant shock for the US economy that could force the Central Bank of the US to cut fees to avoid a recession. Separately, the president of the Fed of Atlanta, Raphael Bostic, said that we still have a path to travel in inflation, since tariffs could exert upward pressure on prices. The Fed cannot make bold movements in any direction, Bostic added.
  • Meanwhile, market participants remain optimistic about a positive result of commercial conversations between the US and Japan. In fact, Trump said last week that difficult but fair parameters are being established for negotiation. In addition, US Treasury Secretary Scott Besent said that Japan could be a priority in tariff negotiations, feeding the hopes of a commercial agreement between the US and Japan. This should continue to act as a tail wind for the Japanese yen.
  • The US economic agenda on Tuesday includes the publication of the Manufacturing Index of Empire State, which, together with trade -related developments, could influence the US dollar. However, the attention will remain focused on the speech of the president of the FED, Jerome Powell, on Wednesday, which will be examined in search of clues about the future path of feat cuts. This, in turn, will influence the USD and will provide a new impulse to the USD/JPY torque.

The USD/JPY could have difficulty building on modest intradic advances and facing a strong obstacle near the 144.00 brand

From a technical perspective, any subsequent movement will probably face a strong resistance and limit the USD/JPY torque near the 144.00 mark, or the maximum of the previous night. However, a sustained strength beyond could trigger a short coverage rally and raise cash prices to the horizontal barrier of 144.45-144.50 en route to the psychological brand of 145.00. The impulse could extend even more towards the 145.50 zone and the round figure of 146.00.

On the other hand, the weakness below the 143.00 brand seems to find some support near the 142.25-142.20 area before the 142.00 mark, or a minimum of several months touched last Friday. A convincing rupture below would be seen as a new trigger for bassists and would drag the USD/JPY torque towards the support of 141.65-141.60 en route to the 141.00 mark. The subsequent fall would expose the support of 140.75 and the minimum of September 2024, around the region of 140.30-140.25, before cash prices finally fall to the psychological brand of 140.00.

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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