Ella 
The Japanese yen (JPY) continued its strong gains during Wednesday’s Asian session and retested its highest level against the U.S. dollar since October 2024. Persistent concerns about the potential economic impact of U.S. President Donald Trump’s massive trade tariffs continued to weigh on investor sentiment and benefit traditional safe-haven assets, including the yen. On top of that, reports that Trump had agreed to meet with Japanese officials to kick-start trade discussions fueled optimism about a possible U.S.-Japan trade deal, further supporting the yen.
In addition, growing acceptance that the Bank of Japan (BoJ) will continue to raise interest rates amid rising inflation in Japan has become another factor supporting the yen. Meanwhile, markets are betting that a tariff-driven slowdown in the U.S. economy could force the Federal Reserve to resume its rate-cutting cycle soon, a stark divergence from expectations at the hawkish Bank of Japan. This has prompted flows into the lower-yielding yen.
However, the USD/JPY pair once again found some support around the mid-144.00 level and moved back above the 145.00 psychological level in the last hour. Traders are now looking forward to the release of the FOMC minutes to gain some momentum ahead of the release of U.S. consumer inflation data on Thursday.
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