USD/JPY steady near 144.75 as Yen rally stalls, US-Japan trade talks in focus

• Japanese Yen posts gains in five of the last six days against the US Dollar.
• USD/JPY stabilizes after falling to 144.09 in early Asian hours.
• Tokyo pushes back on US tariff pressure ahead of key trade talks.

The Japanese Yen (JPY) continues to firm against the US Dollar (USD) on Tuesday, marking the second consecutive day of gains amid broad USD weakness, although the USD/JPY pair is trading flat near 144.75 in American hours. The pair dipped to an intraday low of 144.09 during early Asian trading hours before bouncing back during the European session.

In contrast, the US Dollar Index (DXY), which measures the USD against a basket of six major currencies, remains subdued for the second day as sentiment weakened following Moody's downgrade of the US credit rating from Aaa to Aa1.

Meanwhile, traders remain cautious ahead of renewed trade negotiations between Japan and the United States (US), which are set to resume in Washington later this week. Japanese trade minister Ryosei Akazawa is expected to attend the third round of ministerial-level talks, with US Trade Representative Jamieson Greer also scheduled to participate.

At a press conference on Tuesday, Akazawa reiterated Japan's firm stance on tariffs:

"The slew of US tariffs, including reciprocal tariffs as well as those on automobiles, car parts, steel, and aluminium, are regrettable. There's no change to our stance of seeking a review, which is to say an elimination, of them," he said.

While US officials are reportedly pressing Japan for an early conclusion to the talks, suggesting that striking a deal sooner would give Tokyo an advantage over other countries still negotiating.

Looking ahead, market participants will keep a close eye on Japan's upcoming economic data, which could influence both market sentiment and monetary policy expectations. The Ministry of Finance will release trade figures for April on Wednesday, providing a snapshot of how Japan's exports and imports are holding up amid ongoing global trade tensions and softer demand from key partners like China and the US. Then, on late Thursday, attention will turn to Japan's inflation picture, with the April Consumer Price Index (CPI).