empty
22.05.2025 12:05 AM
The Yen Goes on a Buyer Strike

A collapse in confidence in the U.S. dollar, rumors of coordinated currency intervention, and capital repatriation to Japan are driving USD/JPY back into a downtrend. The music playing in the bulls' camp, based on speculation that the Bank of Japan would not raise the overnight rate in 2025, didn't last long. The pullback turned into an excellent opportunity to enter short positions.

As the G7 summit of finance ministers and central bank governors in Canada nears, speculation about a coordinated intervention in the foreign exchange market to weaken the U.S. dollar is intensifying. Parallels are being drawn with 1985, when the Plaza Accord saw the U.S. compel its allies to strengthen their currencies, causing a sharp drop in the USD index: Donald Trump, notably, dreams of a weaker dollar to boost the competitiveness of American companies.

However, the growing risk of large-scale intervention isn't the only reason USD/JPY is declining. Japan is experiencing a so-called "buyer strike," which is driving up local bond yields at the fastest pace among developed nations, increasing debt servicing costs, and becoming a headache for the government.

Supply and Demand for Japanese Bonds

This image is no longer relevant

The BoJ has redeemed more bonds from its balance sheet than it has purchased anew. Tokyo needs to fill the gap with new issuances, but the Ministry of Finance is struggling to find buyers in the primary market, as investors prefer the secondary market amid rising yields.

According to BoJ and Bloomberg data, net bond issuance has reached the highest levels since 2010, with supply outpacing demand. This has led to falling prices and rising yields. The yield spread between Japanese and U.S. bonds is narrowing, prompting capital repatriation to Japan and further pushing USD/JPY down.

The yen's strengthening is happening amid rising global risk appetite, which is somewhat puzzling. Typically, safe-haven assets come under pressure in such conditions. However, the bears in USD/JPY have plenty of arguments to push the pair south.

Japan's Export Trends

This image is no longer relevant

This image is no longer relevant

They aren't even deterred by the significant slowdown in April's exports, from +4% to +2%, which has been linked to sweeping tariffs imposed by the White House. In reality, exports to the U.S. declined by just 1.8%, while European exports dropped by 5.2%. Regardless, the disruption in trade relations will ultimately reduce foreign trade volumes, negatively impacting the economy and likely preventing the BoJ from resuming monetary policy normalization.

Technical Outlook

Technically, on the daily chart, USD/JPY has fulfilled the previously identified reversal pattern "Three Indians." The first target from shorts initiated at 147.1, down to 144.5, was successfully hit. Now, two more targets at 142.5 and 140.0 remain. It makes sense to hold short positions and consider adding to them periodically.

Recommended Stories

Analisis del par GBP/USD. El 1 de julio. Trump el genio y los estadounidenses ciegos. Parte 2.

El par de divisas GBP/USD bajó moderadamente durante el lunes, lo cual no representa ningún problema para la moneda británica. La libra esterlina puede permitirse tranquilamente perder 100 o incluso

Paolo Greco 07:05 2025-07-01 UTC+2

Análisis del par EUR/USD. El 1 de julio. Trump el genio y los estadounidenses ciegos. Parte 1.

El par de divisas EUR/USD continuó negociándose el lunes dentro de un rango extremadamente estrecho. El lunes hubo pocas noticias, y las que se publicaron no despertaron mayor interés entre

Paolo Greco 07:05 2025-07-01 UTC+2

El Bitcoin convierte a sus competidores en polvo

Expectativas y realidad. Los creadores de criptomonedas las concebían como un universo donde cualquier token podía competir por el dinero de los inversores. En la práctica, aparte del Bitcoin

Marek Petkovich 12:43 2025-06-30 UTC+2

Analisis del par GBP/USD. El 30 de junio. Nóminas no agrícolas, Powell y desempleo.

El par GBP/USD subió 300 puntos durante la semana pasada y, al parecer, no tiene intención de detenerse. Incluso el viernes, el precio no logró iniciar una corrección bajista

Paolo Greco 07:48 2025-06-30 UTC+2

Analisis del par EUR/USD. El 30 de junio. Inflación europea y nueva ronda de discursos de Lagarde.

El par de divisas EUR/USD continúa su movimiento ascendente durante cinco meses consecutivos. En este período, solo hemos visto algunas correcciones bajistas débiles, que cada vez terminaban con otra caída

Paolo Greco 07:48 2025-06-30 UTC+2

Analisis del par GBP/USD. El 27 de junio. La historia no se repite.

El par de divisas GBP/USD continuó su fuerte movimiento alcista durante el jueves. Desde el inicio de la semana, el dólar estadounidense ha perdido "solo" 330 puntos. Ya hemos mencionado

Paolo Greco 07:31 2025-06-27 UTC+2

Analisis del par EUR/USD. El 27 de junio. ¿Podrá Trump equilibrar la balanza comercial?

El par de divisas EUR/USD se encuentra en un "crecimiento libre" (por analogía con el concepto de "caída libre"). El dólar vuelve a precipitarse al abismo, tal como advertimos

Paolo Greco 07:31 2025-06-27 UTC+2

Análisis del par GBP/USD. El 26 de junio. Se acerca el 9 de julio.

El par de divisas GBP/USD durante el miércoles al mediodía se mantuvo en el mismo lugar. Recordemos una antigua señal técnica. Si el precio actualiza un extremo significativo y luego

Paolo Greco 08:30 2025-06-26 UTC+2

Analisis del par EUR/USD. El 26 de junio. Jerome Powell no dijo nada nuevo.

El par de divisas EUR/USD durante el miércoles finalmente se calmó. Recordemos que esta semana comenzó con una tormenta, provocada, por supuesto, por Trump, quien primero anunció un alto

Paolo Greco 08:30 2025-06-26 UTC+2

Análisis del par GBP/USD. El 25 de junio. Trump vuelve a "pasar la aplanadora" sobre la Fed y Powell.

El par de divisas GBP/USD continuó también su movimiento ascendente durante el martes. Si desea conocer solo una pequeña parte de las razones de la nueva caída de la moneda

Paolo Greco 07:52 2025-06-25 UTC+2
¿No puede hablar ahora mismo?
Ingrese su pregunta en el chat.
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaTrade anyway.

We are sorry for any inconvenience caused by this message.