- With no major economic data out of Japan, the yen has reverted to its role as a safe-haven currency…and it has struggled with little demand for safety at the moment.
- The lack of progress toward a substantial trade deal with the US has also weighed on the yen.
- USD/JPY’s rally could stretch toward 147.00 before encountering more significant, longer-term resistance.
It’s been a relatively quiet week for Japanese economic data, with no releases of note thus far. While traders will get figures on average cash earnings and household spending during Friday’s Asian session, those third-tier reports are unlikely to have a meaningful impact on the .
This relatively rare lull in traditional economic data has allowed Japan’s currency to revert to its typical role as a “safe-haven,” and with investors feeling generally optimistic in recent weeks, it’s no surprise that the yen is by far the weakest major currency so far this month:
Source: FinViz
Beyond general “risk on” trade, the other factor weighing on the yen has been a lack of progress toward any substantial trade deal with the US. This contrast came into sharp focus today as the US announced a “trade deal” (technically more of a memorandum of understanding) with another of its classic allies, the UK. With US-Japan talks still on the shelf until at least next week, there is little prospect of an imminent breakthrough on trade between the two Pacific allies.
Japanese Yen Technical Analysis: USD/JPY 4-Hour Chart
Source: TradingView, StoneX
From a technical perspective, USD/JPY has rallied to nearly 1-month highs just below 146.00. As the 4-hour chart above shows, the pair is peaking above its 200-period MA, following the rally in the spread between the two countries. Despite the impressive rally off the late-April lows, USD/JPY remains well below both its year-to-date bearish trend line (red) and the 38.2% Fibonacci retracement of the 2025 drop near 147.10, allowing some room for a near-term rally to extend.
From a longer-term perspective, though, bulls will want to see the pair break convincingly back above that level to signal that a more durable bottom has formed.