Japanese yen falls against the US dollar amid Trump's new tariffs | 03 Febrero 2025

Event to pay attention to today:

17:00 EET. USD - ISM Manufacturing PMI

USDJPY:

The Japanese yen (JPY) declined against its US counterpart for a second straight day on Monday and is moving away from a one-month high reached last week. Concerns over the economic impact of US President Donald Trump's trade tariffs have largely overshadowed the Bank of Japan's (BoJ) hard-hitting summary of views and undermined the yen. In addition, a widespread rally in the US dollar (USD) pushed the USD/JPY pair towards 156.00, or a four-day high, during the Asian session. The increased pressure on the yen is also due to increased investor interest in income-producing assets, which reduces demand for safe haven currencies.

Meanwhile, Tokyo core inflation rising at the fastest pace in almost a year supports market expectations for further interest rate hikes by the Bank of Japan (BoJ). Moreover, a new wave of global risk reduction as well as a narrowing interest rate differential between Japan and the rest of the world may support the safe-haven JPY. In addition, the recent decline in US Treasury bond yields may deter USD bulls from aggressive bets and limit USD/JPY growth. Investors' attention is now focused on the upcoming economic data from the US, as well as on the rhetoric of the Fed and BoJ representatives, which may affect the further movement of the pair.

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

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