Japanese Yen remains on the back foot amid receding safe-haven demand; downside seems limited
- The Japanese Yen snapped a three-day winning streak against the USD on Wednesday.
- US-China Trade Talks Optimism is seen as a weight loss in safe haven JPY.
- A moderate USD uptick supports USD/JPY leading the FOMC policy decision.
The Japanese Yen (JPY) remains depressed in the Asian session on Wednesday, which, along with a modest US dollar (USD) is helping, helps the USD/JPY pair stick to its intradays above 143.00 mark. The global regional sentiment gets a strong aid following the announcement of US-China trade talks with Switzerland this week. In turn, it slows down the demand for traditional safe properties, including JPY. The USD, on the other hand, benefits from some trade reviews in advance of the Key Central Bank risk.
The Federal Reserve (FED) will announce its decision at the end of a two -day policy meeting next Wednesday. Investors will look for clues about the path to cutting the rate of the future, which will play a major role in influencing USD's dynamic price and provide a fresh impetus to the USD/JPY pair. Meanwhile, the growing acceptance that the Bank of Japan (BOJ) will increase interest rates in 2025 amid expanding inflation in Japan, along with ongoing geopolitical risks, warning some caution before applying aggressive JPY bearish bets.
Japanese yen bulls remain on the sides in the middle of a US-China trade conversation
- United States Treasury Secretary Scott Bessent, along with US trade representative Jamieson Greer, will travel to Switzerland later this week for trade talks with Chinese Vice Premier He Lifeng. It came after the Bescent on Tuesday that the Trump administration said that trade dealings could express some of the biggest trade partners early this week and boost investors' confidence.
- This, on the other hand, is seen as a result of demand for traditional safe properties and pressure submission to Japanese Yen during the Asian session on Wednesday. The US dollar, on the other hand, was higher the edges following a three-day loss of verse amidst some trade repose in advance of the FOMC's most important decision and raised the USD/JPY pair above 143.00 mark.
- The Federal Reserve is expected to leave interest rates that will not change at the end of a two-day policy meeting. Therefore, the focus on the market is in the accompanying policy statement. In addition, Fed chair comments Jerome Powell at the post-meeting press conference will be reviewed for clues about the rate of cutting rate, which will take the USD in the near term.
- Meanwhile, the Bank of Japan again said last week that it remains committed to increasing rates of further if the economy and prices move the line with its forecasts. Moreover, expectations that maintain wage walks will boost spending and inflation in Japan to keep the door open for further normalization of the BOJ policy and increasing interest rate at the end of this year.
- Meanwhile, a Kremlin spokesperson warned that an appropriate response would be given immediately if Ukraine did not stop the fire. Adding to this, the security cabinet of Israel agreed to approve a plan to expand the military offensive Gaza and gradually capture territorial control. It maintains geopolitical risks in gaming and should limit JPY's deeper losses.
USD/JPY must surpass 143.55-143.60 obstacles to support prospects for further gains
From a technical point of view, last week's frustration near the 200-period simple moving average (SMA) to the 4-hour chart and the subsequent collapse of Bearish businessmen. Moreover, the oscillators in the sun -time/time -hours charts hold the negative territory, suggesting that the path of at least resistance for the USD/JPY pair remains on the downside. Therefore, any further move can still be seen as a sale opportunity near 143.55-143.60 regions. This, in turn, should take places near the 144.00 mark. This is followed by a 144.25-144.30 supply zone, which, if cleared specifically, can trigger a short cover rally and lift the area prices to 145.00 psychological marks.
On the Flip side, the 142.35 area, or the weekly low, now seems to protect the immediate collapse for the USD/JPY pair leading to the 142.00 mark. A convincing break under the latter may make the prices vulnerable to accelerate autumn towards the next relevant support near 141.60-141.55 regions on route to the 141.00 round figure.
Japanese yen faqs
Japanese Yen (JPY) is one of the most traded currencies in the world. Its value is widely determined by the Japanese economic performance, but more specifically in the Bank of Japan policy, the difference between Japanese and US bond yields, or at risk of entrepreneurs, among other factors.
One of the Bank of Japan's mandates is money control, so its motions are key for yen. The BOJ directly intervenes in the currency markets sometimes, generally lowering the cost of the yen, though it is not prevented from doing so often because of political concerns of major trading partners. The BoJ Ultra-Lose financial policy between 2013 and 2024 has caused the yen to remove the major currency due to an increase in policy variation between Bank of Japan and other major banks. Most recently, the gradual disobedience to this ultra-loose policy has provided some yen support.
In the past decade, the BOJ's stance that clings to ultra-loose financial policy has led to an expansion of policy variation on other central banks, especially in the US Federal Reserve. It supports an expansion of diversity between the 10-year US and Japanese bond, favored the US dollar against the Japanese Yen. The BOJ's decision in 2024 to gradually renounce the ultra-loose policy, in conjunction with reductions in interest rates on other major central banks, narrowed the diversity.
Japanese Yen is often seen as a safe investment. This means that in times of stress on the market, investors are more likely to put their money on Japanese money because of the supposed reliability and stability. The chaotic times are likely to strengthen the amount of yen against other currencies that are seen as more risk to invest.
