- The Japanese Yen attracts some buyers in falls and stops their setback from a minimum of several months in front of the USD.
- The hopes of a commercial agreement between the US and Japan and the increase in the bets for more rise in the Boj rates in 2025 continue to support the JPY.
- A positive turn in the feeling of global risk could limit any significant gain for the JPY, active refuge.
The Japanese Yen (JPY) goes back to his American counterpart for the second consecutive day on Wednesday and moves even more than a maximum of several months reached the previous day. Optimistic comments from Trump administration officials about commercial conversations between the US and China trigger a strong recovery in the feeling of global risk, which, in turn, weighs considerably on traditional shelter assets, including the JPY. In addition, a certain recovery of the US dollar (USD) from a minimum of several years, driven by the relief of fears on the independence of the Federal Reserve (Fed), pushed the USD/JPY to a maximum of a week, a level above the 143.00 mark during the Asian session.
The growing optimism that the US and Japan are approaching an interim trade on trade helps the JPY, which reacted little to the nationally not impressive national PMIS, stopping the intra -fall fall. To this is added the firm expectation that the Bank of Japan (BOJ) will continue to increase interest rates in 2025, which slows JPY’s bassists to make aggressive bets. Meanwhile, investors have been losing confidence in the American economy due to the rapid variation of Trump’s position on commercial policies. This, together with the bets that the Fed will soon resume its cycle of feature cuts, limits the dollar and drags to the USD/JPy torque below the 142.00 mark in the last hour.
The Japanese Yen Alcistas become caution in the face of the decrease in the demand for safe refuge; The descent seems to be damping
- The feeling of global risk receives a strong impulse after the US Treasury Secretary, Scott Besent, said on a private investor summit that the tariff war between the US will be broken out soon. Later, the White House spokeswoman, Karoline Leavitt, told journalists that the Trump administration is preparing the land for an agreement. This, in turn, contributes to improving the appetite of investors by higher risk assets and diverting asset flows considered safe shelters, including Japanese yen.
- Meanwhile, the US president, Donald Trump, ruled out the possibility of taking the unprecedented step to fire the president of the Federal Reserve, Jerome Powell, before his mandate expires in May 2026. This, in turn, triggers a good recovery of the US dollar from a minimum of three years, which helps the USD/JPY to attract some buyers of continuation during the Asian session on Wednesday. However, the USD movement is left without impulse to the prospects of a more aggressive relaxation policy by the Fed.
- According to the CME Group Fedwatch tool, operators are assessing the possibility that the FED reduces indebtedness costs at 25 basic points in June and deliver at least three rates cuts before the end of the year. This marks a great divergence compared to an increasing consensus that the Bank of Japan will continue to increase interest rates in 2025. Apart from this, the hope that Japan can reach a commercial agreement with the USA. It helps to limit the losses of the JPY and causes some sales intradicted around the USD/JPY.
- In fact, the new US ambassador to Japan said last Friday that he is optimistic about an agreement in tariff negotiations between the US and Japan in progress. However, the Minister of Economic Revitalization of Japan, Ryosei Akazawa, said that any agreement will probably take time, since it is difficult to say how long it will have to close the gap between the two parties. This could keep any optimism in the market at bay and justify a certain caution before making aggressive bullish bets around the USD/JPY torque.
- Meanwhile, the preliminary purchasing managers index (PMI) published on Wednesday showed that Japanese manufacturing activity has contracted during the tenth consecutive month in April. The manufacturing PMI of the Au Jibun Bank stood at 48.5 in April, slightly higher than 48.4 of the previous month. In contrast, the Japanese services activity recovered and the PMI of services of the Au Jibun Bank rose to 52.2 during the informed month compared to a neutral reading of 50.0 in March.
- Wednesday’s economic agenda also includes the publication of preliminary global PMIS, which could provide a new perspective on global economic health. Apart from this, trade related developments would play a key role in influencing the feeling of market risk in general and promoting JPY’s demand, active refuge.
The USD/JPY struggles to find acceptance above the 143.00 mark or the 23.6% fibonacci setback level
From a technical perspective, the USD/JPY torque showed some resistance below the psychological brand of 140.00 on Tuesday and the subsequent rebound of short coverage justifies some caution for bassists. However, the impulse of recovery struggles to find acceptance above the 143.00 mark or the fibonacci setback level of 23.6% of the March-April fall. This, in turn, should now act as a key point, above which cash prices could aspire to overcome the peak of the Asian session, around the 143.20 zone, and climb more towards recovering the 144.00 mark. The impulse could extend even more towards the region of 144.25-144.30 or the Fibonacci level of 38.2%.
On the other hand, the weakness below the 141.45 area, or the minimum of the Asian session, now seems to find a decent support near the 141.00 mark. However, a convincing rupture below the latter will suggest that the recent downward trend is still far from finishing and will make the USD/JPY torque vulnerable to a new level test below 140.00, with an intermediate support near the region of 140.45. The subsequent fall would expose the minimum of 2024, around the area of 139.60-139.55.
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.
