The Japanese Yen has been on a losing streak for eight consecutive sessions, influenced by a stronger US Dollar due to the hawkish stance of the Federal Reserve. Masato Kanda, Japan’s top currency diplomat, has warned that he is prepared to intervene in the foreign exchange market around the clock if necessary to address excessive movements. The US Dollar Index has been edging higher as Fed officials delay the timing of the first interest rate cut this year.
At a recent meeting, the Bank of Japan (BoJ) noted that underlying inflation is expected to increase gradually. The US Composite Purchasing Managers Index (PMI) for June exceeded expectations, reaching its highest level since April 2022. Bank of Japan Deputy Governor Shinichi Uchida stated that the central bank is prepared to adjust monetary support based on economic conditions. Japan has also reaffirmed its commitment to achieve a primary budget surplus by the next fiscal year.
Technical analysis shows that the USD/JPY pair remains bullish, with the potential to approach the level of 160.32. On the downside, support is seen at the nine-day Exponential Moving Average (EMA). The Japanese Yen has shown weakness against the Swiss Franc, according to a table showing percentage changes against major currencies.
The Japanese Yen, one of the most traded currencies in the world, is influenced by factors such as the performance of the Japanese economy, Bank of Japan policy, and risk sentiment among traders. The Bank of Japan has intervened in the currency markets at times to control the value of the Yen. The BoJ’s ultra-loose monetary policy has caused the Yen to depreciate against its main currency peers, exacerbated by policy divergence with other central banks, including the US Federal Reserve.
The policy divergence between the Bank of Japan and other central banks has widened the differential between US and Japanese bond yields, favoring the US Dollar against the Japanese Yen. The Japanese Yen is often considered a safe-haven investment, meaning that investors tend to flock to the currency during times of market stress for its stability. Overall, the Japanese Yen’s value is heavily influenced by economic conditions, central bank policies, and global market sentiment.
