- The Japanese yen continues to attract safe refuge flows amid uncertainties related to trade.
- Divergent expectations of monetary policy between the BOJ and the Fed also contribute to the fall of the USD/JPY torque.
- Slightly overextended conditions in the daily chart justify some caution for the JPY bulls.
The Japanese Yen (JPY) begins the new week with a positive note and is strengthened to its highest level from September against a US dollar (USD) that weakens in general during the Asian session. Optimism about commercial conversations between the US and Japan and the underlying bearish feeling in global financial markets continue to drive flows to the JPY, considered a safe refuge. In addition, the data published on Friday showed that the underlying inflation of Japan accelerated in March, which leaves the door open to more increases in interest rates on the part of the Bank of Japan (BOJ), which looks like another factor that supports the JPY.
The JPY bulls, meanwhile, seem quite indifferent to the reports that the BOJ will cut its growth estimates amid concerns about the possible economic repercussions of the high tariffs of US President Donald Trump. The USD, on the other hand, sinks to a new minimum of two years, since the uncertainty about Trump’s commercial policies has affected the confidence of investors in the economic growth of the United States. Even the relatively hard line comments of the president of the Federal Reserve (Fed), Jerome Powell, on Friday, they did little to impress the USD’s bundles, suggesting that the way of lower resistance for the USD The Low.
The Japanese Yen is backed by a combination of support factors; seems prepared to appreciate even more
- Concerns about the announcements of changing tariffs of US President Donald Trump continue to weigh on the feeling of investors and support the demand for traditional assets of safe refuge, including Japanese Yen.
- The new US ambassador to Japan said Friday that he is optimistic about an agreement in the ongoing tariff negotiations between the US and Japan. In addition, Japanese Prime Minister Shigeru Ishiba said on Sunday that he wants tariff conversations between Japan and the USA to be a model for negotiations between the US and other countries.
- Ishiba added that Japan seeks equity in conversations about foreign exchange with the US and suggested flexibility against US accusations about non -tariff barriers in the Japanese automotive market. This continues to feed the hopes that Japan can reach a commercial agreement with the US and becomes another factor that drives flows to the JPY.
- The governor of the Bank of Japan, Kazuo Ueda, said last week the possibility of pausing the rate increase cycle and said that the Central Bank may need to take policy measures if US tariffs harm the Japanese economy. In addition, the reports suggest that the BOJ will cut its growth forecasts amid high risks for the fragile economic recovery.
- However, the governor of the Boj, Kazuo Ueda, said that the real interest rates of Japan are still very low and that the central bank is expected to continue increasing interest rates if the economy and prices move in line with the projections. This opinion was supported by the Boj Board member, Junko Nagakawa.
- In addition, government data published on Friday showed that the underlying consumer price index (CPI) of Japan, which excludes fresh food prices, accelerated to 3.2% year -on -year in March from a 3% increase in the previous month. In addition, the underlying inflation, which excludes both fresh food and energy, increased 2.9% compared to 2.6% in February.
- This points to expanding inflation in Japan and leaves the door open to more rates increases by the BOJ. In contrast, the operators largely ignored the relatively hard line comments of the president of the Federal Reserve, Jerome Powell, last Wednesday and seem convinced that the US Central Bank will resume its cycle of rate cuts in June.
- Meanwhile, the recent mass sale in the US Bonds Market suggests that investors are losing confidence in the US economy. This contributes even more to the continuous fall of the US dollar to its lowest level since April 2022 and drags the USD/JPy torque below the 141.00 brand since September 2024.
The USD/JPY needs to consolidate before the next fall in the middle of a slightly supervenda RSI in the daily chart
From a technical perspective, the Daily Relative Force Index (RSI) already shows slightly supervened conditions and justifies some caution for bassists. Therefore, it will be prudent to wait for a short -term consolidation or a modest rebound before positioning for an extension of the well -established bearish tendency of the USD/JPY torque that has been observed during the last three months approximately.
Meanwhile, an attempt of recovery could now face some resistance near the region of 141.60-141.65. This is followed by the round figure of 142.00 and the barrier of 142.40-142.45, above which a new short coverage movement could raise the USD/JPY to the 143.00 mark to the route to the 143,25-143.30 area. However, any additional movement could continue to be seen as a sales opportunity.
On the other hand, a sustained rupture and acceptance below the 141.00 mark could be seen as a new trigger for bassists and make the USD/JPY pair vulnerable. The subsequent fall could drag cash prices towards the intermediate support of 140.45-140.40 en route to the psychological brand of 140.00. The descending trajectory could extend to the annual minimum of 2024, around the region 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.
