USDJPY: SELL 142.50, SL 142.70, TP 141.50 | 27 May 2025

USDJPY:

The Japanese yen (JPY) reversed modest declines in the Asian session against a weakened US dollar (USD) and hit a new one-month high during the Asian session on Monday. Japanese Prime Minister Shigeru Ishiba said on Sunday that he aims to reach a trade agreement with the US during the Group of Seven (G7) summit on 15 June. This comes amid growing confidence that the Bank of Japan (BoJ) will continue to raise interest rates and serves as a tailwind for the yen.

Following the third round of Japan-US talks, Japanese Prime Minister Shigeru Ishiba said on Sunday that Tokyo intends to push ahead with tariff negotiations with the US with the aim of reaching a result during next month's G7 summit. Moreover, Japan's chief tariff negotiator Ryosei Akazawa said the schedule for the next Japan-US talks is being agreed upon and that he hopes to meet with US Treasury Secretary Scott Bessent during his next visit.

In addition, rising geopolitical risks associated with the protracted war between Russia and Ukraine and conflicts in the Middle East are another factor contributing to the Japanese yen's ‘safe-haven’ status against its US counterpart. Meanwhile, concerns over the growing US budget deficit and expectations that the Federal Reserve (Fed) will eventually take steps to support economic growth have driven the US Dollar down to near one-month lows. This further favours the USD/JPY pair to fall.

Trading recommendation: SELL 142.50, SL 142.70, TP 141.50

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