The Japanese Yen (JPY) maintained its strength throughout the Asian session on Thursday, buoyed by stronger-than-expected Machinery Orders data and ongoing safe-haven demand amid escalating geopolitical and economic uncertainties. This combination weighed heavily on the US Dollar (USD), pushing the USD/JPY pair to hover near a two-week low.
Japan’s Core Machinery Orders surged by 13.0% in March, far exceeding forecasts of a 1.6% decline and marking the highest level in nearly two decades. As a critical leading indicator of capital expenditure over the next six to nine months, this robust data has reinforced market expectations of further policy tightening by the Bank of Japan (BoJ). The central bank has recently signaled a willingness to raise interest rates amid broadening inflationary pressures and rising wages, which could bolster domestic consumption and support ongoing monetary normalization.
Meanwhile, safe-haven flows have underpinned the Yen amid intensifying global risks. Renewed US-China trade tensions, highlighted by China’s condemnation of US export controls on advanced chips, and concerns over the US government’s fiscal trajectory following President Donald Trump’s sweeping tax bill proposal have spurred demand for traditional refuge assets. Trump’s tax plan, expected to add between $3 trillion and $5 trillion to the federal deficit over the next decade, has intensified worries over the US fiscal outlook.
On the diplomatic front, Japan’s Vice Finance Minister for International Affairs, Atsushi Mimura, stated that foreign exchange levels were not discussed in recent finance ministers’ meetings with the US, reaffirming that currency values should be market-determined. Trade negotiations remain optimistic, with Japan’s Trade Minister Ryosei Akazawa and US Treasury Secretary Scott Bessent expected to participate in upcoming ministerial talks.
Additional geopolitical tensions, including US President Trump’s remarks on Russia’s stance in the Ukraine conflict and ongoing Israeli military actions in Gaza, have sustained the cautious market mood, further benefiting the Yen.
From a technical perspective, USD/JPY’s intraday rally stalled near 144.40, a zone coinciding with the 50% retracement of the recent April-May advance and the 200-period Simple Moving Average (SMA) on the 4-hour chart. This level serves as a critical pivot: surpassing it could spark short-covering, but resistance is expected near the 145.00 psychological level and the 38.2% Fibonacci retracement at 145.35-145.40. A decisive breakout above this range may shift short-term momentum towards bullish traders.
Conversely, technical indicators suggest a bearish tilt remains dominant. Daily oscillators are showing increasing negative momentum, while the 4-hour Relative Strength Index (RSI) nears oversold territory, indicating potential short-term consolidation before further declines. A breach below the 61.8% Fibonacci retracement at 143.20 could trigger additional technical selling, driving USD/JPY below the 143.00 mark and potentially down to support near 142.40-142.35, with further downside targeting the 142.00 level.
Investors await the release of global flash Purchasing Managers’ Index (PMI) data and US macroeconomic reports, including Weekly Initial Jobless Claims and Existing Home Sales, which may provide fresh direction for the USD/JPY pair amid evolving trade developments and risk sentiment.
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