The Japanese yen has been making quite a splash in the foreign exchange market recently, catching the attention of investors and traders alike. On Tuesday, the yen caught a bid as sentiment suffered a slight lull, driven by fears of a further selloff in banking stocks. This cautious mood was further fueled by disclosures from First Republic Bank after the US market closed on Monday.
Factors Driving the Japanese Yen of Recent
But what’s been driving Yen’s recent performance beyond these short-term factors? Well, comments made by the Bank of Japan’s new governor and Japanese Finance Minister have certainly played a role. Governor Ueda stressed the importance of keeping Japan’s monetary policy loose in order to achieve the country’s 2% inflation target in a sustainable and stable manner. Meanwhile, Finance Minister Shunichi Suzuki chimed in, saying that the BoJ would raise rates if inflation and wage growth continued to rise.
While the nature of these comments was mixed, they seem to have contributed to the yen’s relatively good day on Tuesday. The currency has been trading higher against the Euro, Dollar, and Aussie Dollar, in part due to the fear of a return of a bank sector selloff.
From a technical perspective, USD/JPY has been trading sideways for the past few weeks, indicating a lull in trading activity. On the other hand, EUR/JPY has been on a tear, rallying close to 1000 pips since March 24. However, the currency pair stopped short of the psychological 150.00 mark, which is ironically the same number where USD/JPY found significant resistance.
So, what can investors and traders take away from all of this? Well, as always, it’s important to keep a close eye on market trends and stay informed of any developments that may impact the yen’s performance. While recent comments from the BoJ Governor and Finance Minister have contributed to the yen’s recent performance, there are always other factors at play in the foreign exchange market. As such, it’s crucial to remain vigilant and adaptable in order to make informed decisions when it comes to trading the yen.
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