- The Japanese Yen struggled against the US Dollar in the forex market.
- This was because of different policies from Japan’s BoJ and the US Fed.
- Last month, the Fed surprised by increasing interest rates, which strengthened the USD.
- Despite this, the Yen found some support as a safe-haven asset during equity market declines.
- Traders awaited the FOMC decision for further cues
The two-day policy meeting was conducted last month by the US Federal Reserve during the whole of April (30th April). It was at this last session that the US Federal Reserve decided to increase its interest rates.
This was the third occasion in 2018 and 2029 projected for it by the Federal Reserve to raise interest rates. This move took several analysts by surprise as it was announced just when they were least expecting it. The recent indication by the Federal Reserve about more interest rate increases caused a decrease in the Turkish lira’s value against the US dollar.
Turkish currency was also depreciated by a recent statement by a top official within the Fed concerning this same matter. However, despite USD strength, the Yen found support as a safe-haven asset amidst a risk-off sentiment triggered by overnight equity market declines in the US and Asia. This risk aversion limited gains for the USD/JPY pair ahead of the crucial FOMC policy decision. Trade in different currencies pairs with TradeEU.
The BoJ’s cautious stance on further policy tightening and uncertain rate outlook, coupled with reports of potential tax breaks for Japanese companies, failed to alleviate pressure on the Yen.
Meanwhile, in the US, robust labor cost data reinforced expectations of delayed rate cuts by the Fed, strengthening the USD further. As traders await the FOMC decision, attention remains on US macroeconomic releases and technical indicators signaling potential movements in the USD/JPY pair.
