The Japanese yen sticks to a positive bias to the tone of the most softened risk. Boj’s Dovish Outlook
- The Japanese yen attracts buyers for the second consecutive day amid the revival of safe demand.
- Usd USD USD/JPY wanders out of its highest level in several weeks on Friday.
- The stop stop to BOJ may lead to JPY gains where the focus turns into a FOMC meeting this week.
The Japanese yen (JPY) on the front foot against the US dollar is the weakest (USD) for the second day in a row, and the dollar pair/JPY withdraws near the 144.00 brand during the Asian session on Monday. The growing economic uncertainty in the wake of US President Donald Trump’s policies to the irregular trade, to a greater extent, overwhelms signs of reducing trade tensions between the United States and China. Aside from this, the geopolitical risks weigh the feelings of investors and push some safe flows towards JPY.
However, any JPY appreciation that appears limited amid the stop of the Bank of Japan (BOJ), which stops last Thursday. Traders may also refrain from putting aggressive stakes for the US dollar before the two -day FOMC policy meeting begins on Tuesday. This may contribute to reducing the negative side of the dollar pair, which calls for caution before emphasizing that the last bounce of the lowest multiple level has run out of steam. Meanwhile, PMI for American ISM services may provide some motivation on Monday.
The Japanese yen maintains his positive bias while reviving the safe demand in the safe term, and the weakest USD
- China said last week that it was evaluating the possibility of trade talks with the United States, providing hopes to get rid of potential tensions between the world’s largest economists. On Sunday, US President Donald Trump announced a 100 % tariff for all films produced by a foreigner.
- Israeli Prime Minister Benjamin Netanyahu pledged to take revenge on the Houthi rebels aligned in Iran, launching a missile that landed near Ben Gurion Airport. In response, Iranian Defense Minister Aziz Nasserazah said that Tehran would return to if the United States or Israel attacked.
- Russian President Vladimir Putin said in the statements published on Sunday that Russia has sufficient power and resources to take the war in Ukraine to its logical end. This keeps geopolitical risks to play and moves safe flows towards the Japanese yen on Monday.
- The Bank of Japan surprised Duofish’s directives last Thursday and forced investors to expand their bets to raise a rate in June or July. However, the expanded inflation in Japan and the prospects for continuous wages keeps the door open to further tightening policy by BOJ.
- The US dollar is struggling to take advantage of the modest bounce on Friday, which followed the optimistic US job data, which showed that the economy added 177,000 new jobs in April compared to 130,000 expected. Other details of the report showed that the unemployment rate remained unchanged at 4.2.
- Data indicated a US labor market that is still flexible despite the increase in economic uncertainty on the back of Trump’s tariff and concerns about renewable prices. Traders have declined their expectations about the resumption of the Federal Reserve Checking Course to July.
- However, this still represents a major difference compared to expectations related to the additional prices by BOJ in 2025 and should serve as the back wind of the low JPY. The market concentration is now moving to a two -day FOMC monetary meeting.
You may now wait for USD/JPY Bears less than 143.75-143.70 before setting new bets
From a technical perspective, the dollar pair/JPY struggled last week to find a 50 % higher acceptance of Fibonacci alternative at the fall of March-April and faced rejection near the SMA simple medium on the graph for 4 hours. This makes it wise to wait for some follow -up purchase until after the 146.00 mark before locating the last Goodish transition from the lowest multi -month level. Immediate prices may climb to the intermediate resistance 146.55-146.60 before aiming to test Fibo 61.8 %. Level, about 147.00 neighborhoods.
Meanwhile, the oscillator on the daily chart is still being held in positive lands, indicating that any later decrease less than 144.00 marks may still be seen as the opportunity to buy. This would help reduce the downside near the Friday drop, around the area of 143.75-143.70, which if the broken can make the JPY pair of the JPY weak. The subsequent slide can withdraw immediate prices to medieval support 143.30 on its way to the round shape 143.00 and 23.6 % FIP, around the 142.65 region.
Common questions between the Bank of Japan
Japan Bank is the Japanese Central Bank, which sets the monetary policy in the country. Its mandate is to issue banknotes, currency implementation and monetary control to ensure price stability, which means the purpose of inflation is about 2 %.
The Bank of Japan began a very monetary policy in 2013 to stimulate the economy and enlarge fuel in a low -inflation environment. The bank’s policy depends on quantitative and qualitative mitigation, or print notes to buy assets such as government bonds or companies to provide liquidity. In 2016, the bank doubled its strategy and increased the policy of alleviating it by providing negative interest rates first, and then directly controls the return of its government bonds for 10 years. In March 2024, BOJ raised interest rates, and effectively retreated from the high -drawing monetary policy position.
The massive incentive of the bank caused a decrease in its decrease against its main peers. This process was exacerbated in 2022 and 2023 due to the increased difference of policy between the Bank of Japan and other major central banks, which chose to increase interest rates sharply to fight high inflation levels. BOJ policy has expanded teams with other currencies, which pulled the yen value. This trend was partially reflected in 2024, when BOJ decided to give up the position of the superior policy.
The weakest yen and the increase in global energy prices increased Japanese inflation, which exceeded the BOJ goal by 2 %. The possibility of high salaries in the country – a major element in inflation in feeding – also contributed to this step.
