The Japanese yen continues to lose ground while the JGB super long yields fall greatly; USD / JPY gets closer to the middle of 143.00
- The Japanese yen attracts heavy intrajournal sellers in the middle of a sharp drop in JGB and commercial optimism.
- The strong services of Japan, PPI reaffirms the betting betting of Boj and should limit any new JPY depreciation.
- The expectations of the Fed Dovish should cap the attempt at USD rebound and act as a headwind for the USD / JPY.
The Japanese yen (JPY) extends an intraday descent before the European session and moves away more than one month's summit against its American counterpart this Tuesday. The reports that Japan will plan to cut the issuance of super long bonds following recent increased increases in tickets for tickets leads to the yield on Japanese government bonds of 30 years at the lowest level since May 8. This, as well as the optimism conducted by the decision of the American president Donald Trump to delay the taxation of prices to the European Union (EU), turns out to be an underlying key factor the JPY of the safety Have.
However, investors remain on the side of uncertainty surrounding trade policies and are concerned about the worsening of American budgetary conditions. In addition, the bets according to which the Federal Reserve (FED) will further reduce loan costs in 2025 could keep a lid on the attempt to recover the US dollar (USD) near the lower monthly and cap the USD / JPY pair. Consequently, it will be prudent to wait for solid follow-up purchases before confirming that cash prices have the substance or positioning for any significant appreciation before the important macro data of this week of the United States and Japan.
The Japanese yen is undermined by a combination of factors; The downward potential seems limited in the midst of Boj rate hiking bets
- Two sources told Reuters on Tuesday that the Ministry of Japan of Finance (MOF) would plan to modify the composition of its bond program for the current financial year, which could involve reductions in its super long bond issue. This triggers a sharp drop in the super long JGB gives and weighs on the Japanese yen.
- The Bank of Japan reported earlier this Tuesday than the price producers' price index (PPI) – a leading indicator of inflation in the Japanese services sector – increased by 3.1% compared to the year earlier in April. This presents itself in addition to the strong figures of the inflation of consumers of last week and maintains the expectations alive with new interest rate increases by the BOJ.
- In addition, the governor of Boj, Kazuo Ueda, has shown that the increase in rates and said that the central bank should be vigilant upwards that the price increase could increase underlying inflation which is already close to its 2%target. This stimulated the Japanese yen and dragged the USD / JPY pair with a lower month during the Asian session.
- Japanese Minister of Finance, Katsunobu Kato, said that interest rates reflect various factors, but the market considers the increase in rates as reflecting concerns about state finances. Kato added that the government would closely monitor the situation of the bond market in the midst of super long bond returns and will continue to tighten dialogues with bond investors.
- President Donald Trump announced an extension of the deadline to impose prices of 50% on imports from the European Union on July 9, by raising the global feeling of risks. However, uncertainty about Trump's trade policies remains, which maintains investors on board and should continue to act as a rear wind for the safety jpy.
- Trump called Russian President Vladimir Putin 'Crazy' and said he was considering new sanctions against Russia after the greatest drone attack on Ukraine in the war of more than three years. In addition, Israel continues to beat Gaza, keeping the geopolitical risks at stake. This should undergo the request for the JPY.
- The US dollar, on the other hand, features a modest recovery compared to the monthly low, although the increase seems limited to the concerns that the tax reductions and the Trump expenditure bill would aggravate the American budget deficit. This, as well as the expectations of the Federal Reserve Dovantes, should cap the greenback and the USD / JPY pair.
- Merchants are now impatiently awaiting the American economic file – with the publication of sustainable products orders and the confidence index of the Conference Board consumers. The objective, however, will remain glued to the FOMC minutes, the preliminary printing of US Q1 GDP and the price of personal consumer expenditure index in the United States (PCE).
- Friday, this week's investors will also face the release of Tokyo CPI, which will play a key role in the influence of JPY prices dynamics. Nevertheless, the fundamental backdrop seems to be tilted in favor of the JPY bulls and suggests that the path of the slightest resistance for the USD / JPY pair remains downward.
The USD / JPY bulls seek to rely on an intraday positive step beyond the FIBO of 61.8%. level of trace; not yet out of the woods
From a technical point of view, the failure of the day before before the level of Fibonacci trace of 61.8% of the April-May rally and the following slide promotes USD / JPY bears. In addition, the oscillators on everyday life chart held in negative territory and are still far from being in the surveillance area. This, in turn, supports the perspectives of another short -term depreciation movement for the pair of currencies.
Consequently, any additional element could face a rigid resistance near the region 143.65, above which the USD / JPY pair could recover the brand 144.00. A strong force beyond the latter could open the way to an increasingly recovery, although the climb can be considered as an opportunity to sell near the area 144.80 and remain capped near the psychological brand of 145.00.
On the other hand, the brand 143.00 could protect the immediate decline before the region 142.50-142.45. Meanwhile, lowering traders could now wait for a break and a sustained acceptance below the 142.00 mark before placing new bets. The USD / JPY pair can then slide below the intermediate support 141.55, towards the round figure 141.00. The descending trajectory could extend more down the year, or levels lower than the psychological brand 140.00 affected on April 22.
Japanese yen faq
The Japanese yen (JPY) is one of the most exchanged currencies in the world. Its value is largely determined by the performance of the Japanese economy, but more specifically by the Japanese bank policy, the differential between Japanese and American bond yields, or the feeling of risks among traders, among other factors.
One of the mandates of the Bank of Japan is the control of currencies, so its movements are essential for the yen. The BOJ has sometimes intervened directly in the currency markets, generally to reduce the value of the Yen, although it refrains from doing so often due to the political concerns of its main business partners. The ultra-losses monetary policy of BOJ between 2013 and 2024 had the yen depreciate against its main peers in foreign currency due to a divergence of increasing policy between the Banque du Japan and other main central banks. More recently, the gradually unfolding of this ultra-launched policy has provided some support to the Yen.
Over the past decade, the position of the BOJ to stick to the ultra-detected monetary policy has led to an extended divergence of policy with other central banks, in particular with the American Federal Reserve. This supported a differential enlargement between the bonds of 10 American and Japanese years, which favored the US dollar against the Japanese yen. The BOJ's decision in 2024 gradually abandoning ultra-launched policy, associated with interest rate reductions in other large central banks, narrows this differential.
The Japanese yen is often considered a safe investment. This means that in times of market stress, investors are more likely to put their money in Japanese currency because of its supposed reliability and stability. Turbulent times are likely to strengthen Yen's value against other currencies considered to be more risky to invest.
