The Japanese yen is making a comeback as traders grow increasingly cautious about global trade tensions and upcoming talks between Japan and the United States. With uncertainty rising and market sentiment turning defensive, investors are once again turning to the yen as a safe-haven currency. This shift is not only driven by geopolitical concerns but also supported by solid economic data from Japan—creating a favourable backdrop for the yen’s recent strength.
The Japanese yen strengthened on Tuesday, edging back toward the 147 level against the US dollar and erasing losses from the previous session.
This move reflects growing investor caution ahead of upcoming trade talks between Tokyo and Washington, coupled with intensifying concerns over escalating US trade disputes.
The USD/JPY pair, which had earlier reached a high of 148.133, ended the day at 147.346 as markets shifted towards safer assets.
Following a direct conversation with Japanese Prime Minister Shigeru Ishiba, US President Donald Trump confirmed plans for high-level trade negotiations.
US Treasury Secretary Scott Bessent will lead the American delegation, with discussions expected to cover key areas such as tariffs, currency dynamics, non-tariff trade barriers, and government support measures.
Despite the diplomatic efforts, Trump dismissed speculation of any delay in implementing reciprocal tariffs, stating the current levies “could remain in place indefinitely”—underscoring continued pressure on international trade flows.
Short-term charts suggest fading bullish momentum for USD/JPY. After peaking at 148.133, the pair turned lower, slipping below both the 5-period and 10-period moving averages on the 15-minute timeframe.
Additionally, the MACD (12,26,9) indicator has crossed downward, hinting at a potential trend reversal.
The next notable support level is situated near the psychologically important 147.00 mark. Should the prevailing risk-off mood persist, further downside pressure could emerge.
Although the broader uptrend remains intact from the 144.551 low, this recent retracement may reflect investor caution ahead of uncertain diplomatic developments.
Aside from geopolitical factors, the yen is also drawing support from encouraging domestic economic indicators.
Japan’s current account surplus rose sharply in February, reaching a record high, driven by robust exports and a significant drop in imports.
This reflects not only resilient overseas demand for Japanese products but also an improved trade balance that reinforces the yen’s underlying strength.
The convergence of global risk aversion and positive local fundamentals is boosting demand for the yen, which is once again asserting its role as a traditional safe-haven currency—especially as equity markets remain unstable and US policy direction becomes less predictable.
Looking ahead, the upcoming US–Japan trade negotiations represent a critical turning point for the USD/JPY trajectory.
A constructive outcome could ease demand for haven assets like the yen, whereas a breakdown in talks or further tariff escalation could prompt renewed yen buying.
For now, the yen appears likely to hold firm, particularly if weakness in global equities, such as the S&P 500, continues.
Traders should monitor key technical levels around 147.00 and 146.50, which may act as near-term support zones.
A decisive break below these could signal a deeper pullback in USD/JPY. In addition, close attention should be paid to statements from officials on both sides, as policy signals could drive short-term market sentiment.
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