According to Lao Dong, on March 18, the Yen (JPY) exchange rate against the US Dollar (USD) increased, showing the depreciation of the JPY. The JPY/USD exchange rate today increased to 149.766 JPY/USD, up about 0.3 percentage points compared to yesterday's session.
The Japanese Yen (JPY) continues to weaken as market sentiment becomes positive, thanks to economic stimulus measures from China and hopes for a peace deal between Russia and Ukraine.
When the market is optimistic, demand for safe-haven assets such as the Yen often decreases, putting pressure on the currency to depreciate. At the same time, the US Dollar (USD) had a slight recovery from its lowest level in 5 months, helping the USD/JPY pair maintain above 149.50 in today's trading session.
Yen's decline may be limited
According to FXStreet, preliminary results from spring salary negotiations in Japan show that companies have agreed to increase salaries strongly for the third consecutive year. This could boost consumption, increase inflation and facilitate the Bank of Japan (BoJ) to continue raising interest rates this year. If the BoJ truly continues its monetary tightening policy, the Yen could regain some strength.
Meanwhile, the US Federal Reserve (Fed) is expected to cut interest rates at least three times in 2025, due to concerns about the slow growth rate of the US economy. This could reduce the attractiveness of the USD, limiting the upward momentum of the USD/JPY pair. In addition, the latest economic data from the US showed retail sales in February increased by only 0.2%, much lower than the forecast of 0.7%. This reflects consumer caution and could be a signal for the Fed to continue its loose policy.
Investors are now focusing on key US economic data such as construction permits, housing starts and industrial output, but the biggest focus remains on the BoJ and Fed interest rate decisions on Wednesday. This will be a key factor determining the next trend of the USD/JPY pair.
