- The Japanese yen attracts buyers for the second straight day between revival of safe-hovel demand.
- A modest USD downtic on Friday removes USD/JPY away from high of a multi-week.
- Boj’s Dovish Pause can cap for JPY profit as a focus at the FOMC meeting this week.
The Japanese yen trades for the second straight day on Monday with a mild positive prejudice against its American counterpart to revive safe-heaven demand, although there is a lack of rapid punishment in the upper. Despite the signs of reducing the US-China trade tension, a rapid shifting stance on US President Donald Trump’s trade policies place investors on the edge. In addition, geo -political risk weighs on the sentiments of investors and gives some support to JPY. In addition, the weakness of a minor US dollar (USD) withdraws the ASD/JPY pair close to 144.00 points during the Asian season.
However, the Bank of Japan (BOJ) dovish pause jPy may prevent bulls from placing aggressive bets last Thursday. In fact, BOJ reduced its predictions for economic growth and inflation for the current year, forcing the market participants to put their bets for immediate interest rate hike. In addition, traders can avoid placing bets of aggressive USD recession and can opt for the edge to go to the shore before the two -day FOMC meeting starting on Tuesday. It can act as a tailwind for the USD/JPY pair and limit any corrective slide from the high level of a multi-week on Friday.
Japanese yen benefits from revival of safe-hobe demand amid growing geopolitical risks, business uncertainties.
- China said that last week it was evaluating the possibility of trade talks with the US, fueling hopes for potential de-size of stress between the world’s two largest economies. US President Donald Trump on Sunday announced a 100% tariff on all foreign-produced films.
- Israeli Prime Minister Benjamin Netanyahu vowed to retaliate against Yemen’s Iran-based Hurti rebels, firing the missile landing near the Ben-Gurian airport. In response, Iran’s Defense Minister Aziz Nasirzade said that Tehran would return if the US or Israel attacked.
- Russian President Vladimir Putin said in the comments published on Sunday that Russia had sufficient strengths and resources to take the war in Ukraine to its logical conclusion. It keeps geopolitical risk in sports and on Monday flows safely towards Japanese yen.
- Bank of Japan surprised Dowish guidance last Thursday and forced investors to return their stakes for Rate Hike in June or July. However, the possibilities of widespread inflation and constant wages in Japan keep the door open to tighten further policy by BOJ.
- The US dollar struggles to capitalize on Friday’s slight surge, which after the US Jobs data showed that the economy added 177k new jobs against 130K in April. Other details of the report showed that the unemployment rate remained unchanged at 4.2.
- Despite Trump’s economic uncertainty on the back of the tariff and renewed value pressures, the data still pointed to the flexible US labor market. The traders pushed back their expectations about the federal reserve’s rate-cutting cycle to resume from June to July.
- This, however, still has a larger deviation compared to expectations for the additional rate hike by BOJ in 2025 and should act as a tailwind for low yield jPY. The focus of the market now turns into a two -day FOMC monetary policy meeting starting on Tuesday.
USD/JPY technical setup supports the possibilities for the emergence of some dip-boires under 144.00 round figure
From a technical point of view, the USD/JPY pair last week struggled to receive approval above the 50% Fibonacci retracement level of March-April decline and faced rejection near a 200-term simple moving average (SMA) on a 4-hour chart. This makes it prudent to wait to buy a few follow-wealth beyond 146.00 points before the situation to expand the multi-front recent good recovery tricks. Spot prices may climb 146.55–146.60 intermediate resistance before the target of testing 61.8% FIBO. Level, around 147.00 neighborhoods.
Meanwhile, the oscillator on the daily chart still lives in a positive field, suggests that any later decline below the 144.00 points can still be seen as a purchase opportunity. This can help limit the negative side near Friday’s swing low around the area of 143.75–143.70, which can weaken the broken USD/JPY pair. The latter slide can pull the spot prices on the 143.00 round figure and 23.6% fibo on the 143.30 intermediate support n route, around 142.65 region.
Japanese yen fAQ
Japanese Yen (JPY) is one of the world’s most trading currencies. Its value is broadly determined by the performance of the Japanese economy, but especially the policy of the bank of Japan, the difference between the Japanese and American bond yields, or the risk feeling between traders, among other factors.
One of the mandate of Bank of Japan is currency control, so its tricks are important for Yen. The BOJ has sometimes intervened directly into the money markets, usually to reduce the value of the yen, although it often refrains from doing so due to the political concerns of its main trading partners. BIJ Ultra-Luz Monetary Policy between 2013 and 2024 depreciated Yen against its main currency peers due to increasing policy deviation between Bank of Japan and other main central banks. Recently, the Yen has been unknowingly supported some of this ultra-lux policy.
In the last decade, BOJ’s attitude of Ultra-Luz monetary policy has given rise to a comprehensive policy deviation with other central banks, especially with the American Federal Reserve. This supported widening the difference between a 10 -year -old US and the Japanese bonds, which supported the US dollar against the Japanese Yen. The decision of BOJ in 2024 is gradually reducing this difference, with cutting interest-rate cut in other major central banks, to gradually abandon the ultra-lux policy.
The Japanese yen is often seen as a safe-hevan investment. This means that in the time of market stress, investors are more likely to invest their money in Japanese currency due to their reliability and stability. In turbulent times, the value of the yen against other currencies is likely to strengthen, which is more risky to invest.
