FX.co ★ Japanese Yen Strengthens as Dollar Retreats

On Monday, the Japanese yen strengthened, approaching 144 against the U.S. dollar, building on its gains from the previous trading session. This shift occurred against a backdrop of a weakening dollar, influenced by ongoing concerns about global trade. Investor sentiment was notably influenced by President Donald Trump’s recent statements, in which he mentioned that China was receptive to entering into a trade agreement, yet offered no specific details or timeline. Additionally, markets are keenly observing the results of the recent U.S.-Japan bilateral trade discussions, with Tokyo aiming to finalize an agreement by June.

On the monetary policy front, the Bank of Japan maintained its policy rate at 0.5% last week, a move widely anticipated by analysts. However, the central bank revised its growth and inflation forecasts downward, reinforcing the market's expectation that interest rate increases are unlikely in the near future. Furthermore, trading volumes are projected to remain low on Monday due to a public holiday in Japan.