Ella 
The Japanese yen (JPY) attracted fresh buyers at the start of a new week and held near its highest level since late September 2024 against a broadly weakening U.S. dollar (USD). Concerns about the rapid escalation of the U.S.-China trade war and its impact on the global economy continued to support traditional safe-haven assets, including the yen. In addition, hopes that Japan could reach a trade deal with the United States is another factor supporting the yen.
Meanwhile, signs of broadening inflation in Japan have opened the door for the Bank of Japan (BoJ) to further raise interest rates. Instead, investors have begun pricing in the possibility of aggressive policy easing from the Federal Reserve amid concerns that an escalating U.S.-China trade war would hamper U.S. economic growth. This would lead to a further narrowing of the interest rate differential between Japan and the United States, suggesting that the path of resistance for the low-yielding yen is to the upside.
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