Japanese yen declines as Trump's tariff plans favour the US dollar | 31 Enero 2025

USDJPY:

The Japanese yen (JPY) underwent heavy selling during the Asian session on Tuesday and pulled back from the six-week high reached the previous day against its US counterpart. Investors remain concerned about the potential economic fallout from US President Donald Trump's trade policies, which in turn undermines the Japanese yen. In addition, a good rebound in US Treasury bond yields was another factor pushing flows away from the low-yielding yen. The recovery of the US dollar is adding to the pressure on the yen, reducing its attractiveness.

Nevertheless, a significant decline in the yen seems unlikely amid bets that the Bank of Japan (BoJ) will continue to raise interest rates. On the contrary, the Federal Reserve (Fed) is expected to cut interest rates twice this year, which in turn could serve as a headwind for US bond yields, the dollar and the currency pair.

Investors continue to monitor developments, including upcoming speeches by Fed and BoJ officials, as well as the publication of key economic indicators that could affect the future dynamics of USD/JPY.

Trade recommendation: Trading mainly with Sell orders from the current price level.

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