Japanese Yen advances to fresh multi-week top against a broadly weaker USD
The Japanese Yen (JPY) climbed to a nearly three-week high against a broadly weaker US Dollar (USD) during the Asian session on Tuesday and seems poised to appreciate further. The Bank of Japan's (BoJ) Tankan Survey showed that business confidence at large manufacturers in Japan improved for the first time in two quarters during the April-June period. Moreover, firms expect consumer prices to remain above the central bank's 2% annual target over the next five years. This backs the case for further interest rate hikes by the BoJ and turns out to be a key factor underpinning the JPY.
Meanwhile, the JPY bulls seem unaffected by US President Donald Trump's hints at more tariffs on Japan, which, according to Japan’s top trade negotiator, Ryosei Akazawa, would cause significant damage to the economy. The USD, on the other hand, has touched a fresh low since February 2022 amid the growing acceptance that theFederal Reserve(Fed) would resume its rate-cutting cycle in the near future. This marks a big divergence in comparison to the BoJ's hawkish stance, dragging the USD/JPY pair below mid-143.00s and validating the positiveoutlookfor the lower-yielding JPY.
Japanese Yen bulls retain control as hawkish BoJ expectations offset trade concerns
USD/JPY seems vulnerable to slide further towards testing sub-143.00 levels
From a technical perspective, an intraday slide below last week's swing low, around the 143.75 region, could be seen as a key trigger for the USD/JPY bears against the backdrop of the recent breakdown through the 200-period Simple Moving Average (SMA) on the 4-hour chart. Moreover, oscillators on 4-hour and daily charts have been gaining negative traction, suggesting that the path of least resistance for spot prices is to the downside. Hence, a subsequent slide towards the 143.00 mark, en route to the next relevant support near the 142.75-142.70 region, looks like a distinct possibility.
On the flip side, the 144.00 round figure now seems to cap any attempted recovery. Any further move up could be seen as a selling opportunity and cap the USD/JPY pair near the 200-period SMA on the 4-hour chart, currently pegged near the 144.40 region. A sustained strength beyond the latter, however, might trigger a short-covering rally and allow spot prices to reclaim the 145.00 psychological mark.
Economic Indicator
Tankan Large Manufacturing Outlook
Tankan major production growth forecast published byBank of Japanis the forecast of growth in the Manufacturing sector in the next quarter. It is considered an indicator of future business expectations. A high index is considered positive (or bullish) for JPY, while a low index is seen as negative (or bearish) for JPY.
Last release:Mon Jun 30, 2025 23:50
Frequency:Quarterly
Actual:12
Consensus:9
Previous:12
Source:Bank of Japan
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