**Yen Weakens Further Ahead of Key Trump-Takaichi Meeting**
*Original article credits: Economies.com*
The Japanese yen continued its downward trajectory against the U.S. dollar in forex markets, approaching key support levels as traders awaited the outcome of a highly anticipated meeting between former U.S. President Donald Trump and Japan’s ruling party policy chief, Sanae Takaichi. The summit is viewed as a critical event that could shape the economic and geopolitical direction of U.S.-Japan relations, with potential implications for currency volatility and economic policy coordination.
**Yen Hits New Lows Amid Elevated Volatility**
– The USD/JPY pair surged in recent trading sessions, reaching new multi-month highs around the 153.00 mark.
– The currency pair remains firmly in bullish territory, supported by widening interest rate differentials and safe-haven outflows from the yen.
– As of the latest market data, the yen is one of the worst-performing major currencies this year, largely due to diverging monetary policy between the Federal Reserve and the Bank of Japan (BoJ).
Traders have attributed the yen’s consistent depreciation to the BoJ’s continued ultra-loose stance, in contrast with the Federal Reserve’s more aggressive posture, which has included several interest rate hikes over the past year to combat persistent inflation.
**Upcoming Trump-Takaichi Summit Raises Market Anticipation**
– Market participants are fixated on the upcoming meeting between Donald Trump and Sanae Takaichi, scheduled in the coming days.
– The meeting has sparked widespread speculation among economists and traders about possible shifts in Japan’s economic strategy should conservative leadership gain influence.
– While Trump is not currently in office, his global influence on economic policy—especially concerning trade and monetary issues—remains pronounced.
Despite holding no formal government role at the moment, Trump’s consultations with international policymakers are being closely monitored by investors. His former presidency was marked by aggressive trade negotiations and vocal criticism of currency manipulation, particularly with countries like China and Japan.
Sanae Takaichi, who has said she backs a robust yen policy and economic reforms, is considered a potential successor to Prime Minister Fumio Kishida. As such, her discussions with Trump may provide early insights into Japan’s future fiscal and foreign trade policies.
**Technical Outlook: USD/JPY Remains Strong**
– The USD/JPY pair is maintaining strong upward momentum, bolstered by favorable technical patterns.
– Technical analysts have identified the formation of a bullish ascending channel, reinforcing expectations for continued gains unless fundamental changes prompt a reversal.
– Key levels to watch:
– Resistance: 153.50 and 154.00, psychological and historically strong.
– Support: 151.80 and 150.25, key points that could signal the beginning of a correction if breached.
Traders are advised to monitor price action around the 153.00–154.00 levels. A breakout above these zones could open the door toward testing multi-decade highs near 155.00, levels not seen since the 1990s.
**Fundamental Factors Influencing the Yen**
Several fundamental drivers are exerting downward pressure on the Japanese yen:
1. **Monetary Policy Divergence**
– The BoJ under Governor Kazuo Ueda has maintained negative interest rates and extensive monetary easing, with the central bank hesitant to act until inflation sustainably exceeds target levels.
– In contrast, the U.S. Federal Reserve has implemented multiple aggressive rate hikes, moving the federal funds rate to its highest point in over two decades.
2. **Trade and Current Account Pressures**
– Japan’s trade balance remains under strain due to higher import costs fueled by elevated energy prices and a weaker yen.
– A weaker yen makes imports more expensive, increasing costs for businesses and consumers.
3. **Safe-Haven Sentiment Weakening**
– The yen has traditionally served as a safe-haven asset during times of global financial stress.
– However,
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