Fundamental Market Analysis for January 28, 2025 USDJPYThe Japanese yen (JPY) weakened during the Asian session on Tuesday, moving away from the six-week high recorded earlier against the US dollar (USD). The weakening was driven by investor concerns over the impact of US President Donald Trump's trade policy. Tougher rhetoric on trade tariffs, in particular statements about new duties, undermined the yen's position as a defensive asset. An additional pressure factor was the rise in US Treasury bond yields, which attracted capital flows into dollar assets.
Amid the recovery of the US dollar, which reached the lowest level since 18 December, the USD/JPY pair approached 155.00. Despite the current weakness of the yen, analysts believe that its significant decline is unlikely. This is due to expectations that the Bank of Japan (BoJ) will continue to raise interest rates, supporting the national currency.
On the other hand, the US Federal Reserve (Fed), according to forecasts, may cut interest rates twice in 2025, which will put pressure on the dollar. A rate cut could reduce the attractiveness of US assets and hamper further growth of the USD/JPY pair.
Investors will closely follow macroeconomic data and speeches of central bankers. USD/JPY is expected to remain in the range of 154.50-155.50, but any change of rhetoric from the Fed or BoJ can significantly affect the market dynamics.
Trade recommendation: Watching the level of 155.00, trading mainly with Sell orders
