USDJPY: SELL 142.55, SL 143.55, TP 140.55 | 04 Junio 2025

Event to pay attention to today:

17:00 EET. USD - JOLTs Job Openings

USDJPY:

The Japanese yen (JPY) retreated sharply from a one-week low against the U.S. currency during Tuesday's Asian session. Comments from former Bank of Japan (BoJ) board member Makoto Sakurai, as well as requests made at the central bank's May 20-21 meeting with financial institutions, indicate that the BoJ may slowly continue to shrink its balance sheet. In addition, it underscores the challenge the BoJ faces in withdrawing large-scale monetary stimulus. In addition, the moderate recovery in global risk sentiment is encouraging traders to ease their bullish bets on the yen.

However, a significant Yen depreciation still seems unlikely amid growing confidence that the Bank of Japan will continue to raise interest rates amid rising inflation in Japan. These forecasts were confirmed by Bank of Japan Governor Kazuo Ueda's speech to the Japanese parliament. This, along with rising trade and geopolitical tensions, could support the safe-haven yen. Meanwhile, the Bank of Japan's sentiment forecasts are strongly at odds with market pricing, suggesting at least two rate cuts by the Federal Reserve (Fed) this year, which should halt any US Dollar (USD) recovery and favor the low-yielding Yen.

Trade recommendation: SELL 142.55, SL 143.55, TP 140.55

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