- Japanese Yen attracts new purchases as commercial concerns increase the demand for safe refuge.
- The hopes of a commercial agreement between the US and Japan and the expectations of raising of the BOJ further prop up of the JPY.
- The moderate expectations of the Fed keep the USD depressed and also weigh on the USD/JPY torque.
The Japanese Yen (JPY) recovers positive traction after the modest fall of the previous day, since the uncertainties related to trade keep investors in suspense and continue to support traditional assets of safe refuge. In addition, the data published today showed that Japan’s basic machinery orders rebounded sharply in February and exceeded market expectations. This, together with the hopes that Japan can reach a commercial agreement with the US and the growing acceptance that the Bank of Japan (BOJ) will continue to raise interest rates in 2025, turn out to be other factors that support the JPY.
Meanwhile, the expectations of a hard line box mark great divergence compared to the growing bets for a more aggressive policy relief by the Federal Reserve (Fed). This would result in a greater reduction in the rate differential between Japan and the US, which, in turn, supports the prospects for an additional movement of the JPY of lower performance. The US dollar (USD), on the other hand, languishes about a minimum of several years amid concerns that the Trump administration’s commercial policies hinder the economic growth of the United States. This keeps the USD/JPY along a minimum of a minimum of more than six months reached last week.
Japanese yen continues to receive support from uncertainty about Trump’s commercial policies and the expectations of a hard line box
- The changing and fast position of the president of the US, Donald Trump, on commercial tariffs continues to feed uncertainty and support the traditional assets of safe refuge, including Japanese Yen. During the weekend, the Trump administration granted exclusions of tariffs elevated to smartphones, computers and other electronic imported mostly from China.
- In addition, Trump suggested on Monday that he was considering possible exemptions for the automotive industry of 25% tariffs already in force. However, Trump promised more tariffs in other key sectors such as semiconductors as soon as next week and threatened to impose tariffs on pharmaceutical products in the near future.
- The data published on Wednesday showed that Japan’s basic machinery orders increased more than expected, 4.3% in February, marking the highest level in a year and a strong recovery of the fall of 3.5% of January. Additional details of the report revealed that manufacturing orders increased by 3%, while non -manufactured orders jumped 11.4%.
- This points to an improvement in business feeling, which should support capital investment and increase employment. In addition, salary increase could boost demand driven. This keeps the door open to another rise in interest rates of the Bank of Japan during the first half of 2025 and turns out to be another factor that supports the JPY.
- Investors are still 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 possible commercial agreement between the US and Japan.
- Meanwhile, the recent and unusual mass sale of US Treasury Bonds suggests that investors are losing faith in the US economy, which continues to affect the attractiveness of the US dollar. In addition, operators have been valuing the possibility that the Federal Reserve resumes the reduction of fees in June and reduces their policy rate at 100 basic points this year.
- Therefore, the speech of the president of the Fed, Jerome Powell, later this Wednesday will be examined closely in search of clues on the future road cuts and to determine the short -term trajectory of the USD. Meanwhile, US retailers should allow operators to take advantage of short -term opportunities around USD/JPY torque later during the North American session.
USD/JPY bassists could aim to try the minimum of several months around 142.00; The recovery tried will probably be sold
From a technical perspective, the inability of the USD/JPY torque to attract significant buyers suggests that a downward trend of several months is still far from finishing. In addition, the oscillators in the daily chart are deeply maintained in negative territory, which suggests even more than the path of lower resistance for cash prices remains down. Meanwhile, any additional fall will probably find some support near the region of 142.25-142.20, or the weekly minimum, before the 142.00 mark, or the minimum of several months reached last Friday. A convincing rupture below the latter will reaffirm the negative bias and open the way for an additional short -term depreciation movement for the currency pair.
On the other hand, an attempt to recover above the 143.00 brand could now face a strong resistance near the maximum oscillation of the previous night, around the 143.60 region. Any additional movement could be seen as an opportunity for sale and remain limited near the round figure of 144.00. The latter should act as a key point, which if it is exceeded decisively could trigger a short coverage rally and raise the USD/JPY torque towards the horizontal barrier of 144.45-144.50 on 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.
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.
