Yen exchange rate today
According to Lao Dong, on May 26, the Japanese Yen (JPY) decreased slightly after reaching a one-month high against the US Dollar (USD).
The reason is through the optimistic psychology of global trade prospects, making the need for safe shelter assets such as JPY temporarily cooled down. However, the weakness of JPY is considered negligible when the market still expects Japan to soon reach trade agreements with the US, and at the same time, the Central Bank of Japan (BOJ) is likely to continue raising interest rates in the near future.
Investors are cautious about trade and interest rate fluctuations
According to FXStreet, in the US, investors are expecting the US Federal Reserve (Fed) to cut further interest rates in 2025. The opposite development in the monetary policy between BoJ and Fed is creating a large differentiation, making the yen - even the currency has low capacity - is still supported. Therefore, investors are now more cautious before betting on the rise of the USD/JPY pair, due to the decline in the possibility of the dollar still exist.
Regarding the trade situation, Japanese Prime Minister Shigeru Ishiba said the country is making efforts to promote tariff negotiations with the US and hopes to make progress at the G7 Summit next month. Meanwhile, Japan is also preparing for the next round of talks, with the hope of meeting directly with the US Treasury Secretary to discuss more in-depth trade cooperation.
On the other hand, consumer inflation in Japan is showing signs of increasing more strongly than expected, combined with expectations that salary increases will continue to push prices higher. This makes it likely that the BoJ will continue to raise interest rates to control inflation, further strengthening the Yen in the coming time.
On the geopolitical front, tensions continue to escalate as Russia conducts its largest airstrike since the start of the war in Ukraine. At the same time, Israeli attacks in Gaza killed at least 38 people. These developments have added to the volatility of the global financial market.
This week, investors will focus on important US economic data such as durable commodity orders, preliminary GDP and PCE - the Fed's preferred inflation measure. In addition, the minutes of the FOMC meeting and the Tokyo CPI will also be important guiding factors for the short-term development of the USD/JPY currency pair.
