empty
18.06.2025 01:09 PM
Yen fails to strike deal

Investors are in no rush to buy the Japanese yen. The escalation of armed conflict in the Middle East has not helped USD/JPY bears. Fears of Brent crude soaring past $100 per barrel should have prompted a rush into safe havens. Instead, the US dollar is rising despite having supposedly lost its safe-haven status. Has the Forex market flipped upside down again?

In reality, everything is unfolding as it should. At the G7 summit in Canada, Japan failed to secure a trade agreement with the United States. Now Tokyo awaits a letter from the White House, the so-called black mark, which will outline the new tariff terms. It is highly unlikely the letter will propose lowering import duties on automobiles. A 25% tariff would be extremely damaging for Japan's economy. The automotive sector generates 10% of GDP and employs 5.6 million people, or 8.3% of the country's workforce.

Japan's export dynamics

This image is no longer relevant

Is it any wonder that Japan's exports shrank by 1.7% in May? This marked the first decline since September of last year. Exports to the US dropped by 11.1%, mainly due to falling shipments of cars, auto parts, and semiconductor equipment. The negative impact from foreign trade increases the risk of a recession in the Japanese economy and discourages USD/JPY bears.

Especially considering the Bank of Japan is in no hurry to tighten monetary policy. At its June meeting, the BoJ kept the overnight rate at 0.5% and announced an additional £200 billion reduction in QE asset purchases starting in April 2026. On one hand, this calmed investors after recent jitters tied to rising domestic bond yields. On the other hand, the longer quantitative easing persists, the worse it is for the yen.

The yen's failure to strengthen in response to geopolitical conflict in the Middle East points to a geographic logic behind safe-haven flows. Investors had previously stopped treating the US dollar as a refuge, since risks were emanating from the United States. However, once a new global flashpoint appeared, the greenback regained favor.

This image is no longer relevant

USD/JPY bears are also under pressure from fears of a hawkish surprise by the Fed. If two or three FOMC officials revise their outlook on the federal funds rate, the consensus for two rate cuts by the end of 2025 could drop to just one. That would give the US dollar another boost, as would any upward revisions to the Fed's inflation forecasts.

On the daily chart, USD/JPY is consolidating within a 142.5–145.5 range. A breakout above the upper boundary would be a signal to buy. A break below would justify selling. An aggressive strategy would involve opening short positions on the US dollar against the yen if the pair fails to hold the fair value level around 144.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

AUD/JPY. Analysis and Forecast

The AUD/JPY pair is regaining positive momentum after a modest pullback the previous day. However, spot prices remain confined within a multi-day range due to mixed fundamental signals, trading near

Irina Yanina 14:39 2025-06-20 UTC+2

USD/CHF: The Pair Struggles to Gain Momentum Amid Conflicting Forces

At present, USD/CHF shows no clear intraday direction and fluctuates within a narrow range just above the 0.8155 level, reflecting market uncertainty during the European session. The Swiss franc

Irina Yanina 14:36 2025-06-20 UTC+2

The Euro Will Retain Its Strength and Investor Interest

During her speech, IMF Managing Director Kristalina Georgieva stated that she sees the potential for the euro to play a broader role globally.Her remarks came amid growing geopolitical instability

Jakub Novak 11:25 2025-06-20 UTC+2

Euro Slightly Rises After Lagarde's Speech

The euro saw a modest recovery after European Central Bank President Christine Lagarde stated that expanding trade within the region could help offset losses resulting from global fragmentation. Her optimistic

Jakub Novak 11:10 2025-06-20 UTC+2

Donald Trump – A Mastermind of Geopolitical Uncertainty (A Potential Correction in Oil and Gold Prices)

Six months into Donald Trump's presidency, it seems he has already thoroughly exhausted the world with his "brilliant" initiatives, groundbreaking actions aimed at making America great again, and his vivid

Pati Gani 09:49 2025-06-20 UTC+2

The Market Tries to Extinguish the Fire

Markets are digesting Donald Trump's announcement that a decision on U.S. strikes against Iran will be made within two weeks. The White House could have acted at any moment

Marek Petkovich 09:01 2025-06-20 UTC+2

What to Pay Attention to on June 20? A Breakdown of Fundamental Events for Beginners

There are very few macroeconomic reports scheduled for Friday. The only report of the day will be the UK retail sales report. No economic data will be released today

Paolo Greco 07:45 2025-06-20 UTC+2

GBP/USD Overview – June 20: The Bank of England Didn't Surprise

The GBP/USD currency pair traded relatively calmly on Thursday, given the fundamental backdrop available to the market. On Wednesday evening, the Federal Reserve announced the results of its latest meeting

Paolo Greco 07:16 2025-06-20 UTC+2

EUR/USD Overview – June 20: Summing Up the Fed Meeting

The EUR/USD currency pair traded relatively calmly on Wednesday and Thursday. Recall that the results of the latest 2025 Federal Reserve meeting were announced on Wednesday evening, but we didn't

Paolo Greco 07:16 2025-06-20 UTC+2

USD/JPY. Analysis and Forecast

The Japanese yen is showing weakness against the stronger U.S. dollar, with the USD/JPY pair reaching a new monthly high. This rise in the dollar against the yen is mainly

Irina Yanina 20:12 2025-06-19 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.