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The Japanese Yen attracts some buyers on Tuesday, though it lacks follow-through. Concerns that Trump’s tariffs would impact Japan’s industries cap gains for the JPY. The divergent BoJ-Fed expectations favor USD/JPY bears amid subdued USD demand. The Japanese Yen (JPY) edges higher against its American counterpart during the Asian session on Tuesday and for now, seems to have stalled the previous day’s retracement slide from over a one-week high. The Bank of Japan’s (BoJ) Tankan survey showed that Japanese enterprises raised their inflation forecasts for one year, three years, and five years ahead. This, in turn, backs the case for more rate increases from the BoJ and turns out to be a key factor supporting the JPY. Moreover, a modest US Dollar (USD) downtick keeps the USD/JPY pair depressed below the 150.00 psychological mark.  The JPY bulls, however, lack conviction amid a positive turnaround in the global risk sentiment, which tends to undermine the safe-haven currency. Apart from this, receding expectations that the BoJ would raise the policy rate at a faster pace, amid worries about an economic slowdown on the back of US tariffs, act as a headwind for the JPY. Nevertheless, the BoJ’s hawkish outlook still marks a big divergence in comparison to bets that the Federal Reserve (Fed) will resume its rate-cutting cycle soon. This, in turn, suggests that the path of least resistance for the lower-yielding JPY remains to the upside.  Japanese Yen draws support from bets that the BoJ will continue raising interest rates The Bank of Japan’s Tankan survey released earlier this Tuesday showed that business confidence at large manufacturers in Japan eased in the first quarter (Q1) of 2025. The headline large Manufacturers’ Sentiment Index came in at 12.0 in Q1 from the previous reading of 14.0, in line with consensus estimates. Additional…

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Filed under: News - @ April 1, 2025 2:22 am