The Japanese Yen rallied across the board last Friday as the final University of Michigan survey showed consumer sentiment slumping more than expected and the long term inflation expectations got revised even higher.
That was the catalyst that reignited stagflationary fears and triggered renewed risk-off flows. Moreover, overnight we got the WSJ report saying that Trump was weighing broader and higher tariffs with potential hikes of up to 20%. This added fuel to the negative sentiment.
The main driver of major FX pairs is yield differentials. The US 10 year yield fell off a cliff as traders expect the Federal Reserve to cut amid slowing growth and potential recession with the stock market continuing to selling off.
In the USDJPY chart below we can see how the US 10 year yield (red line) dragged the pair lower.
The question now is what comes next? Well, nobody knows at the moment. Right now, the markets want to err on the defensive side going into the US reciprocal tariffs plan unveiling on Wednesday. That's the day that will define the next direction as it will shape future expectations.
Better than expected news should trigger a relief rally as traders will pare back their rate cuts expectations. Conversely, bad news will likely lead to another selloff in the pair with the 140.00 handle coming into sight.
This article was written by Giuseppe Dellamotta at www.forexlive.com.Hence then, the article about why the jpy got bid across the board was published today ( ) and is available on forex live ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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