Select Language

Japanese Yen draws support from reviving safe-haven demand amid trade concerns

Breaking news

Japanese Yen draws support from reviving safe-haven demand amid trade concerns

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2025.07.10 11:36
Japanese Yen draws support from reviving safe-haven demand amid trade concerns

update 2025.07.10 11:36

  • The Japanese Yen recovers further from a two-week low touched against USD on Wednesday.
  • Tariff jitters benefit the safe-haven JPY, while Fed rate cut bets undermine the Greenback.
  • Reduced BoJ rate hike bets could act as a headwind for the JPY and warrant caution for bulls.

The Japanese Yen (JPY) is building on the previous day's goodish recovery from over a two-week low and scaling higher for the second consecutive day against a broadly retreating US Dollar (USD). Investors remain on edge amid persistent uncertainties surrounding US President Donald Trump's trade policies, which, in turn, benefit the safe-haven JPY. The USD, on the other hand, is undermined by prospects for more interest rate cuts by the Federal Reserve (Fed) this year, bolstered by FOMC Minutes on Wednesday. This, in turn, contributes to the USD/JPY pair's intraday slide back below the 146.00 round figure during the Asian session.

Meanwhile, investors now seem convinced that rising trade tensions would add to woes for Japan's economy and force the Bank of Japan (BoJ) to forgo raising interest rates this year. The expectations were reaffirmed by Japan's Producer Price Index (PPI) released earlier this Thursday, which hinted that inflation pressures might be cooling off. This, along with domestic political uncertainty, might hold back the JPY bulls from placing aggressive bets and help limit further losses for the USD/JPY pair. Traders now look to the US Weekly Initial Jobless Claims, which, along with speeches by influential FOMC members, would drive the Greenback.

Japanese Yen attracts safe-haven flows amid rising trade tensions

  • US President Donald Trump issued a new round of trade letters, outlining individual tariff rates ranging from 20% to 50% for eight countries starting August 1. A notable aspect of the 20 letters sent so far was Trump's direct threat to increase tariffs if any countermeasures are taken.
  • Moreover, Trump announced 50% tariffs on copper and has also threatened to impose levies of up to 200% on foreign drugs, fueling concerns about the economic fallout from trade tensions. This assists the safe-haven Japanese Yen to attract buyers for the second straight day on Thursday.
  • Japan hopes to arrange meetings between its chief negotiator Ryosei Akazawa and US Treasury Secretary Scott Bessent during his visit to the World Expo on July 19. Japan also aims to secure a call prior to the meeting, and possibly a meeting between Prime Minister Shigeru Ishiba and Bessent.
  • Minutes from the June 17-18 FOMC meeting released on Wednesday indicated that policymakers anticipate that rate cuts would be appropriate later this year and that any price shock from tariffs could be temporary or modest. This is seen weighing on the US Dollar and the USD/JPY pair.
  • A report released by the Bank of Japan on Thursday revealed that Japan's Producer Price Index (PPI) fell 0.2% in June and rose by 2.9% compared to the same time period last year. The readings were in line with estimates, though the annual rate marked a deceleration from May's 3.3%.
  • Moreover, data released earlier this week showed that the growth in Japan's nominal wages decelerated for the third straight month in May 2025, and inflation-adjusted real wages posted the steepest decline in 20 months. This backs the case for the BoJ caution in the near term.
  • Recent media polls raised doubts about whether the ruling coalition of the Liberal Democratic Party (LDP) and Komeito will be able to secure enough seats to maintain their majority at the House of Councillors election on July 20. This adds a layer of uncertainty and could cap the JPY. 
  • Traders now look forward to the release of the US Weekly Initial Jobless Claims, due later during the North American session. Apart from this, speeches from Fed officials will be scrutinized for cues about the future rate-cut path, which should drive the USD and the USD/JPY pair.

USD/JPY bears await break below 100-hour SMA before placing fresh bets

From a technical perspective, intraday breakdown below the 23.6% Fibonacci retracement level of the recent move up from the monthly swing low could be seen as a key trigger for the USD/JPY bears. The subsequent fall, however, finds some support near the 145.75 region, representing the 100-hour Simple Moving Average (SMA). The said area should now act as a pivotal point, below which spot prices could extend the fall towards the 38.2% Fibo. retracement level, around the 145.50-145.45 area. Some follow-through selling could eventually drag the pair to the next relevant support near the 145.00 psychological mark, or the 50% retracement level.

On the flip side, any recovery beyond the 146.00 mark might now confront resistance near the 146.25-146.30 area ahead of the 146.55 region. A sustained strength beyond the latter will suggest that the corrective pullback has run its course and allow the USD/JPY pair to reclaim the 147.00 round figure. The momentum could extend further towards the 147.60-147.65 intermediate hurdle en route to the 148.00 mark, or the June monthly swing high.

Tariffs FAQs

Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.

Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.

There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.

During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.


Date

Created

 : 2025.07.10

Update

Last updated

 : 2025.07.10

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

Gold Price Forecast: XAU/USD is testing trendline resistance at $3,325

Gold (XAU/USD) found buyers right below the $3,300 level on Wednesday to regain some of the ground lost over the previous days.
New
update2025.07.10 20:00

AUD/USD jumps to near 0.6570 as RBA needs confidence over inflation cooling down

The AUD/USD climbs to near 0.6570 during the European trading session on Thursday.
New
update2025.07.10 19:45

USD/CNH: Chance of edging lower and testing 7.1720 - UOB Group

Softening underlying tone may lead to US Dollar (USD) edging lower and testing 7.1720 against Chinese Yuan (CNH). In the longer run, increasing momentum suggests USD may rise, but it is too early to expect 7.2000 to come into view, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
New
update2025.07.10 19:13

USD/CAD eases from 1.3700 Fed cuts hopes, higher Oil prices

The US Dollar retreated from two-week highs above 1.3700 on Wednesday, following the release of the FOMC m¡inutes and weighed by falling US Treasury yields.
New
update2025.07.10 19:07

Rising JGB yields keep Yen under pressure - BBH

USD/JPY eased off from this week's high above 147.00, while JPY continues to underperform against most major currencies, BBH FX analysts report.
New
update2025.07.10 19:03

USD/JPY: Scope to extend to 145.60 before stabilisation - UOB Group

Pullback in US Dollar (USD) has scope to extend to 145.60 before stabilisation is likely against Japanese Yen (JPY); strong support at 145.20 is unlikely to come under threat.
New
update2025.07.10 19:00

MXN: Inflation figures bring no relief - Commerzbank

Yesterday's Mexican inflation figures offered little relief: the seasonally adjusted core rate remained roughly consistent with the previous two months, Commerzbank's FX analyst Michael Pfister notes.
New
update2025.07.10 18:56

USD/JPY consolidates around 146.30 as investors seek current status of US-Japan trade talks

The USD/JPY pair trades sideways around 146.30 during the European trading session on Thursday. The pair consolidates as investors await fresh news regarding trade talks between the United States (US) and Japan.
New
update2025.07.10 18:54

NZD/USD: Price action indicates that further NZD weakness is likely - UOB Group

New Zealand Dollar (NZD) is expected to trade in a range against US Dollar (USD), most likely between 0.5980 and 0.6020. In the longer run, price action indicates that further NZD weakness is likely; the level to watch is 0.5950, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
New
update2025.07.10 18:43

RUB: Sanctions threat returns - Commerzbank

The likelihood of new, harsh sanctions on Russia is rising again: western leaders are abandoning hopes of meaningful diplomacy and reverting back to economic pressure, which had been the consensus strategy until US President Donald Trump took over.
New
update2025.07.10 18:33

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel