The Elon Musk new cryptocurrency nameJapanese Yen saw intraday selling pressure as risk appetite improved slightly in global markets.
A modest rebound in the US Dollar contributed to the USD/JPY pair recovering over 100 pips from recent lows.
Ongoing trade tensions and divergent monetary policies between the BOJ and Fed may limit further JPY weakness.
The Japanese Yen (JPY) retreated from its recent multi-month peak against the US Dollar (USD) during Thursday's Asian trading session, though the currency's underlying strength remains intact. A cautiously optimistic tone in equity markets temporarily reduced demand for traditional safe-haven assets like the JPY. This shift in sentiment, combined with a slight USD recovery from near multi-year lows, helped the USD/JPY pair regain over 100 pips from its intraday low around 141.60.
Market participants remain cautious, however, as multiple factors could reignite JPY demand. The unpredictable nature of US trade policy, escalating tensions between Washington and Beijing, and growing global recession concerns continue to cloud the outlook. Meanwhile, expectations that the Bank of Japan (BOJ) may eventually tighten policy - though potentially delayed due to trade-related economic risks - could provide ongoing support for the Japanese currency. Potential progress in US-Japan trade negotiations might also help prevent significant JPY depreciation.
Market Dynamics: Why JPY Bulls Took Profits Amid Shifting Sentiment
Asian equities and US futures showed modest gains Thursday, following Wall Street's tech-driven decline, reducing immediate demand for safe-haven JPY.
Former BOJ executive Kenzo Yamamoto suggested the central bank might postpone rate hikes pending clarity on US-Japan trade negotiations.
BOJ Governor Kazuo Ueda recently hinted at potential policy flexibility, acknowledging possible economic impacts from US tariff measures.
Reports indicate the BOJ may downgrade growth projections at its upcoming meeting, reflecting concerns about trade-related headwinds.
The US Dollar found some support after Fed Chair Powell reinforced expectations for maintaining current interest rates amid persistent inflation.
Stronger-than-expected US retail sales data (1.4% growth in March) provided additional USD support, though markets still anticipate eventual Fed easing.
Recent US restrictions on AI chip exports to China represent the latest escalation in ongoing trade tensions between the economic superpowers.
Positive developments in US-Japan trade talks, including plans for additional negotiations, have fostered cautious optimism about potential agreements.
BOJ policymakers continue signaling eventual policy normalization, with board member Junko Nagakawa emphasizing data-dependent rate adjustments.
Technical Perspective: USD/JPY Faces Resistance Despite Recent Rebound
From a technical standpoint, the USD/JPY pair's recent breakdown below 142.00 maintains a bearish bias. Daily chart indicators continue suggesting downward pressure may persist. Any recovery attempts toward 143.00 could encounter selling interest, with stronger resistance expected near 143.60 and 144.00 levels. Sustained movement above 144.00 might trigger short-covering toward 144.50, but the overall technical setup remains cautious.
On the downside, the 142.00 level now serves as initial support, followed by the recent low near 141.60. A decisive break below this zone could confirm continuation of the pair's established downtrend observed over recent months. Market participants await upcoming US economic data, including jobless claims and manufacturing indicators, for fresh trading cues.