The Japanese Yen is weak, weak, weak. It remains downbeat as it struggles with a negative market sentiment through the initial European trading day on Thursday. The continued bullish tone on the Yen maintains strength in the USD/JPY currency cross, with gains holding firm above 143.00. This represents a slight increase in the strength of the US Dollar. Speculators are scrambling to position themselves all the way on either side of the curve. Just as traders look towards key US Nonfarm Payroll (NFP) data out on Friday.
As of the end of Thursday, the USD/JPY pair has clearly closed well above that 143.00 barrier. This increase is only possible due to the remarkable appreciation of the US Dollar. Market analysts maintain that the small gain against the Greenback is due to increasing confidence on tariff agreements. This optimism is focused on US-state and US-Federal agreements with Canada, or US-Federal agreements with the European Union. These positive policy advances and other developments have helped improve market sentiment, offering some support to the US Dollar.
Against these stronger influences on the US Dollar, the Japanese Yen’s performance is clearly limited. The prevailing macro environment favors Yen the least in terms of upside potential. This is primarily due to the fact that investors are feeling more confident in a rate increase by the Bank of Japan (BoJ). Market participants are repositioning in anticipation of shifts in monetary policy. At the same time, the Japanese Yen can’t catch a meaningful bid.
Now, fears for the Japan Yen are swelling. Its inability to firm up in the face of increasing expectations of imminent BoJ rate hikes is compounding the damage. More recent market dynamics indicate that traders are becoming much more risk-adverse to being positioned for a Yen favorable move. This dovish optimism continues to weigh heavily on the Yen. Consequently, it sinks to new lows against major currencies.
Market analysts note that the Japanese Yen’s struggles can be attributed to a combination of external factors and internal economic conditions. The international trade deal landscape finally turning somewhat positive, Yen downside seems well protected from this. As market participants continue to adjust their trading strategies ahead of pivotal economic data, Yen’s weakness continues.
Upside in the USD/JPY remains well supported above 143.00. This trend is indicative of increased bullish sentiment from market participants toward US Dollars amid optimism toward upcoming trade deals. Many analysts have cited this recent slight increase of the Greenback as a signal of increasing confidence in our economy. This is in direct opposition to what is happening to the Japanese Yen at the moment.