Yen exchange rate today
According to Lao Dong, on July 28, the Japanese Yen (JPY) continued to depreciate against the US Dollar (USD), marking the third consecutive decline.
The USD/JPY pair surpassed 148.00 in the trading session in Asia, reaching a one-week high. The main reason comes from the active return of market sentiment, causing demand for safe-haven assets such as the Yen to weaken.
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According to FXStreet, the market is more optimistic after the information that the US and the European Union (EU) have made progress in trade negotiations, along with plans to resume trade dialogue between the US and China. This has prompted investors to seek risky assets such as stocks, rather than holding the Yen which is seen as a safe haven in times of uncertainty.
In addition, data released last weekend showed that consumer inflation in Tokyo - the city that represents the general trend of the whole country of Japan - has cooled down more strongly than expected in July. This development has raised expectations for the Bank of Japan (BoJ) to soon raise interest rates to decrease, thereby putting pressure on the Yen.
Not stopping there, domestic political instability is also creating obstacles. After the ruling coalition's failure in the recent Senate election, investors believe the BoJ could delay tightening monetary policy to maintain economic stability.
However, a rare bright spot is the newly signed trade agreement between Japan and the US. The deal helps ease economic uncertainty and could create a premise for the BoJ to start normalizing monetary policy by the end of the year a factor that could support the Yen in the medium term.
On the other hand, the USD has maintained its upward momentum since last weekend thanks to expectations that the US Federal Reserve (Fed) will keep interest rates unchanged at the upcoming meeting, while sending a positive message about economic prospects.
