Yen

USD/JPY is in the spotlight ahead of the Wednesday FOMC rate decision, although Yen-weakness has been more noticeable in both EUR/JPY and GBP/JPY of late.

In the last two trading sessions, the Japanese yen has strengthened by more than 1.5% against the U.S. dollar and USD/JPY is falling back below the 145 yen per dollar level.

Wall Street futures surged after a US court blocked Trump’s tariffs, lifting risk appetite, weakening the yen, and driving Nikkei 225 and Nasdaq 100 futures higher.

The EUR/JPY forecast has become increasingly tricky to pin down, caught between global bond market turmoil and the eurozone’s own set of macroeconomic challenges. But the path of least resistance is starting to tilt to the downside again.

Over the last three trading sessions, the Japanese yen has strengthened by more than 2% against the U.S. dollar, reaching the 140 yen per dollar area as the bearish bias intensifies in the short term.

Today, the Japanese yen appreciated by nearly 1% against the U.S. dollar, introducing a notable bearish bias in the current movements of the USD/JPY pair.

The BoJ held rates at 0.5% as expected, but trade risks cloud the outlook. USD/JPY and GBP/JPY rally, with bulls eyeing 145 and 193 respectively.

Despite the sharp declines seen in USD/JPY in recent sessions, a recovery of nearly 1% has been observed, favoring the U.S. dollar.

To say markets were volatile on Thursday following the confirmation of Trump’s tariffs would be quite an understatement. Wall Street futures suffered their worst day since the pandemic, the US dollar tumbled and even gold had a rough day for once. But it is worth nothing the CHF outperformed JPY for safe haven flows, amid an extremely volatile day for currency traders.

The Japanese yen was the weakest currency on Thursday, with traders lowering their expectations of a BOJ hike in light of Trump's tariffs. GBP/JPY was the outperformer as traders are also lowering their expectations of BOE cuts. But whether USD/JPY can break out above its 200-day EMA and the 152 handle likely requires a soft set of inflation figures from Tokyo and a stronger-than-expected US PCE report today.

The anticipated bounce on the US dollar index is finally underway, Wall Street indices enjoyed their best day in just over a week and the Japanese yen was broadly lower as the week kicked off with a risk-on tone.