Japanese Yen Surges to 6-Week High as Dollar Weakens – Traders Eye More Gains in July
The Japanese yen has jumped to its highest level in nearly six weeks, as the U.S. dollar weakens across the board. The USD/JPY pair dropped to the mid-143 range during early Asian trading, showing a strong comeback for the yen.
This movement is driven by two major factors:
First, Japan’s latest Tankan survey from the Bank of Japan showed better-than-expected business confidence. Big manufacturers are feeling more positive, and many companies believe inflation will stay above the central bank’s 2% target. This has increased hopes that the Bank of Japan might raise interest rates in the coming months.
Second, the U.S. dollar is losing strength, mainly because traders expect the Federal Reserve to cut interest rates soon. There’s now a 74% chance of a rate cut by September, which is pushing the dollar down.
Adding to the drama, former U.S. President Donald Trump recently warned about possible new auto tariffs on Japan and criticized slow progress in trade talks. This has made traders more cautious and led to increased demand for the yen as a safe-haven currency.
Also, July is usually a good month for the yen. In the past four years, it has gained nearly 2.8% against the dollar on average during this month.
Impact:
The yen could stay strong if Japan signals more rate hikes and the dollar remains under pressure. USD/JPY might drop further if current trends continue.