Japanese Yen Trades With Positive Bias Against USD; Looks Set To Strengthen Further
The Japanese Yen (JPY) moved higher against its American rival during the Asian session on Tuesday (4/7) and for now, seems to have stalled the previous day’s sharp decline from near multi-month tops. Despite growing concerns that tighter US reciprocal tariffs could negatively impact the Japanese economy, signs of broadening inflation in Japan keep the door open for further interest rate hikes by the Bank of Japan (BoJ) in 2025. This, in turn, was seen as a key factor that continued to lend support to the JPY.
Meanwhile, concerns about the disruption to the global economy caused by US President Donald Trump’s reciprocal tariffs benefited the JPY’s relative safe-haven status. Meanwhile, traders have been pricing in the possibility that a tariff-driven US economic slowdown could force the Federal Reserve (Fed) to cut interest rates aggressively. This marks a major divergence from the BoJ’s hawkish expectations, which hampered the US Dollar’s (USD) two-day recovery from multi-month lows and further supported the lower-yielding JPY.
Source: FXStreet
