Japanese Yen Holds Steady Against USD Amid Mixed Market Signals; Bearish Bias Persists

Japanese Yen Holds Steady Against USD Amid Mixed Market Signals; Bearish Bias Persists

The Japanese Yen (JPY) stalled its recovery from a two-week low against the US Dollar (USD) as mixed economic signals and trade jitters kept investors cautious. Despite some intraday buying, the USD/JPY pair remains capped amid ongoing concerns over global trade tensions and Federal Reserve policy expectations.

Trade Tensions and Inflation Outlook Weigh on JPY

Investors remain worried that escalating trade disputes could dampen Japan’s economic growth, pressuring the Bank of Japan (BoJ) to hold off on interest rate hikes this year. This view was reinforced by Thursday’s Producer Price Index (PPI) data, which suggested easing inflation pressures.

Adding to the caution is domestic political uncertainty in Japan, which undermines confidence in the Yen’s near-term strength.

Fed Rate Cut Expectations Cap USD/JPY Gains

While optimism in global equity markets reduced demand for the safe-haven Yen, the USD/JPY pair rebounded modestly from its daily low near 145.75. However, this upside remains limited as market participants factor in expectations that the Federal Reserve (Fed) will implement further interest rate cuts in 2025.

The possibility of a looser US monetary policy environment has put USD bulls on the defensive, maintaining a bearish bias on the Japanese Yen against the Dollar.

What Traders Should Watch Next

• BoJ’s stance on interest rates amid inflation trends
• Impact of ongoing US trade tariffs on Japan’s economy
• Fed’s upcoming policy moves and rate decision timelines
• Market risk sentiment and equity market trends affecting safe-haven flows

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