During the Japan-U.S. summit, former President Trump said he wants to reduce the U.S. trade deficit with Japan. He also mentioned that tariffs on Japan are one option. However, compared to other countries, Japan faces lower tariffs, which could help slow down the weakening of the yen.
Last week, a Bank of Japan official, Mr. Tamura, said interest rates may need to rise to around 1% in the second half of the year. Japan’s Finance Minister, Mr. Kato, also confirmed that inflation is still present. Because of this, the market believes Japan and the U.S. may be preparing to stop the yen from weakening, and investors started buying yen.
This week, Trump’s comments may again impact the market, so investors should pay attention. The U.S. Consumer Price Index (CPI) will also be announced. If it shows inflation is slowing, the U.S. central bank may face pressure to lower interest rates.
Additionally, other Bank of Japan officials may also speak about stopping the yen’s decline, following Mr. Tamura’s comments. Because of these factors, the USD/JPY exchange rate may struggle to go higher.
Today’s expected USD/JPY range: 152.00 – 150.80
This week’s expected USD/JPY range: 153.00 – 149.20
Note: This analysis does not guarantee profit. Make your own decisions when trading.