Japanese Yen under pressure against USD but still has recovery momentum
According to FXStreet, on February 21, the Japanese Yen (JPY) is under pressure to weaken against the USD, although it has somewhat narrowed its sharp decline during the day. The main reason is that Japanese policymakers are looking to curb the increase in government bond yields (JGB).
However, JPY sellers are still hesitant to bet strongly on the currency's decline, due to expectations of the BoJ continuing to raise interest rates. This was further strengthened after Japan released higher-than-expected inflation data, showing rising price pressure.
Japan's Finance Minister Katsunobu Kato warned that rising long-term interest rates could aggravate the country's financial burden. At the same time, the Governor of the Bank of Japan (BoJ), Mr. Kazuo Ueda, has sparked speculation about the possibility of intervention to control JGB's yields.
Along with that, the USD is also struggling, making it impossible for the USD/JPY pair to take advantage of the strong recovery of nearly 150 pip from the lowest level since the beginning of December.
USD under pressure, market sentiment cautious
On the other side, the USD has hit its lowest level since December 10 due to Walmart's poor profit forecast raising concerns about the financial health of US consumers. In addition, concerns surrounding former President Donald Trump's trade protectionist policies are also putting pressure on the greenback.
In addition, the US Federal Reserve (Fed) still maintains a cautious stance towards cutting interest rates. Some Fed officials are concerned that inflation expectations may continue to increase, posing a risk of prolonged inflation suspension. However, there are also opinions that the Fed can make two interest rate cuts this year, depending on upcoming economic developments.
Investors are now awaiting preliminary US PMI data, along with reports on home sales and the Michigan Consumer Confidence Index. These data, combined with statements from Fed members, will affect the trend of the USD and the USD/JPY pair in the coming days.
According to Lao Dong at 12:00 on February 21, 2025, the Yen increased to 150.451 USD/JPY.
