Historically, the Japanese Yen has been considered a safe haven. This has made the currency pair a preferred investment option for many investors. However, recent developments in the US and Asia have led to a shift in the market sentiment towards riskier assets. This has resulted in a decline in the Yen against the US dollar. This trend is expected to continue. However, the pair has seen some positive momentum this year.
The Bank of Japan (BoJ) has continued its aggressive monetary easing, maintaining its ultra-low benchmark rate at a record low of -0.25%. The central bank has also maintained its dovish stance, which is expected to support the Japanese economy. In May, BoJ Governor Haruhiko Kuroda stated that the central bank will continue to stick to monetary easing. However, the Yen is still vulnerable to pressure from the Bank of Japan’s dovish stance.
The Bank of Japan is expected to release its monetary policy statement on Friday. This will provide traders with direction for the USD/JPY pair. A press conference will be held in order to discuss the central bank’s monetary policy statement. Markets will listen closely to the statements of the Bank of Japan in order to determine the direction of the currency pair.
The USD/JPY pair has started the year on a strong note. However, recent declines in the US treasury have led to a decline in the pair. The decline in the US dollar has pushed the yen higher. The Bank of Japan has kept its monetary policy ultra-low, which has led to increased demand for safe-haven assets. In fact, the USD/JPY pair has seen a positive trend since December.
The Japanese yen reached a historic high in October. This level has been the highest since 1990. However, the yen has seen a significant drop in value since then. It is expected that the yen will continue to weaken against the dollar in the near term. This could impact the long-term outlook for the pair.
US bond yields have also played a major role in driving the USD/JPY lower. Since January, the 10-year US Treasury yield has been rising. In addition to this, US inflation has been rising, which has led the Fed to raise rates aggressively. This has pushed inflation above the Fed’s 2% target. However, the CPI report for the US printed lower than expected, which bolstered the expectation of a peak in inflation. In addition, the US economy is expected to grow at a 3.6% rate over the next two years, which is a much better outlook than Japan’s. This will help strengthen the USD/JPY pair in the long term.
In addition to US Treasury yields, the 10-year Japanese yen yield is also an important factor in the pair’s outlook. Since the beginning of the year, the yen has made one month highs against the dollar. However, the Bank of Japan’s dovish policies have helped to boost the Japanese economy. In fact, Japan’s economy is expected to grow by 2.5% in 2022.