The Japanese Yen is climbing steadily for the second day in a row. Investors are turning to safe-haven assets once again. Due to growing fears of a global recession, demand for the Yen has surged. Notably, US tariff policies have amplified these worries. Consequently, markets are seeking stability in currencies like the Yen.
Another key factor is the Bank of Japan's hawkish outlook. The BoJ is expected to raise interest rates further this year. Rising domestic inflation strengthens this view. Additionally, Deputy Governor Shinichi Uchida confirmed the central bank's readiness. He said more hikes would come if inflation stays strong. This positive stance continues to boost the Japanese Yen.
Following a recent call, US President Donald Trump agreed to meet with Japanese officials. Both countries plan to begin trade discussions soon. This development eases some trade-related fears. Moreover, Trump praised the strong US-Japan relationship. As a result, traders anticipate a potential deal. Such hopes also drive safe-haven demand for the Japanese Yen.
In contrast to Japan’s tightening stance, the US Federal Reserve seems likely to cut rates. Markets now see a 60% chance of a rate cut in May. In fact, the Fed may deliver up to five cuts by year-end. Even with inflation risks rising from tariffs, this outlook persists. Consequently, the US Dollar has weakened for two consecutive days.
The combination of Yen strength and USD weakness is notable. The USD/JPY pair is close to the 144.55 level—its lowest since October 2024. Furthermore, investors are eyeing the FOMC minutes for clues. Upcoming CPI and PPI data later this week could influence Fed policy. These releases will likely shape the next move in the USD/JPY exchange.
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The Japanese Yen strengthens as global recession fears grow and BoJ signals further rate hikes. Discover key market drivers now.
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