FX.co ★ Yen Supported by Safe-Haven Demand

The Japanese yen strengthened to approximately 140.5 against the dollar on Tuesday, reaching a seven-month high as investors gravitated towards safer investments amidst escalating global trade tensions and increasing doubts about US assets. Market sentiment was further undermined by the lack of progress in trade negotiations, as China remained steadfast against President Trump’s stringent tariff initiatives. Confidence in the US economic outlook was further shaken following Trump’s threat to dismiss Fed Chair Jerome Powell due to delays in implementing interest rate cuts. Domestically, focus shifts to the upcoming Bank of Japan policy meeting next week. The central bank is anticipated to maintain its key interest rate at 0.5%. However, it may consider revising its economic growth forecasts downward due to rising external challenges, especially the impact of US-imposed tariffs on Japan’s predominantly export-oriented economy.