USD/JPY claws back early losses and rebounds to near 150.20 as US Dollar recovers

Source Fxstreet
  • USD/JPY recovers early losses as the US Dollar rebounds from the 10-day low.
  • US-China trade tensions improve the safe-haven demand of the Japanese Yen.
  • Fed dovish bets have escalated amid US labor market risks.

The USD/JPY pair recovers its early losses and rebounds to near 150.20 during the late European trading session on Friday. The pair bounces back as the US Dollar (USD) licks its wounds despite uncertainty over trade relations between the United States (US) and China remaining intact.

During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, turns flat around 98.35 after recovering from the 10-day low of 98.00 posted earlier in the day.

Trade relations between two biggest powerhouses of the world are going through a rough phase as Washington has imposed additional 100% tariffs on imports from Beijing in response to the announcement of rare earths export control measures.

Additionally, firming Federal Reserve (Fed) dovish bets are also expected to remain a major drag on the US Dollar. According to the CME FedWatch tool, traders have fully priced in a 50-basis-points (bps) reduction in interest rates in the remaining year and see a 19.6% chance that the Fed could cut borrowing rates by 75 bps.

Meanwhile, the Japanese Yen (JPY) trades higher against its peers as US-China trade tensions have increased its safe-haven demand.

On the domestic front, investors remain uncertain over the Bank of Japan’s (BoJ) monetary policy outlook for the remaining year. “I would like to keep gathering more information and scrutinise various data that comes out leading up to our October policy meeting,” Ueda said in a news conference in Washington earlier in the day, according to Reuters.

 

US Dollar FAQs

The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.

The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.

In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.

Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.


 

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Gold Price Forecast: XAU/USD climbs above $3,350 as Trump rekindles trade tensionsThe Gold price (XAU/USD) extends its upside to around $3,365 during the early Asian session on Monday. The precious metal edges higher as traders rushed toward the traditional safe-haven assets after US President Donald Trump widened the global trade war with a fresh wave of tariffs.
Author  FXStreet
Jul 14, Mon
The Gold price (XAU/USD) extends its upside to around $3,365 during the early Asian session on Monday. The precious metal edges higher as traders rushed toward the traditional safe-haven assets after US President Donald Trump widened the global trade war with a fresh wave of tariffs.
placeholder
Apple Q4 revenue tops estimates; $1.1B tariff impact forecastApple projected its revenue for the current quarter ending in September well above Wall Street forecasts on Thursday.
Author  Mitrade
Aug 01, Fri
Apple projected its revenue for the current quarter ending in September well above Wall Street forecasts on Thursday.
placeholder
OpenAI Introduces Lowest-Cost ChatGPT Subscription in India with UPI Payment OptionOn Tuesday, OpenAI introduced ChatGPT Go, its most affordable AI subscription tier, targeting the price-sensitive Indian market. Nick Turley, OpenAI’s Vice President and Head of ChatGPT, announced the launch via an X post, highlighting that users can pay through India’s Unified Payments Interface (UPI).
Author  Mitrade
Aug 19, Tue
On Tuesday, OpenAI introduced ChatGPT Go, its most affordable AI subscription tier, targeting the price-sensitive Indian market. Nick Turley, OpenAI’s Vice President and Head of ChatGPT, announced the launch via an X post, highlighting that users can pay through India’s Unified Payments Interface (UPI).
placeholder
ANZ Raises Gold Price Forecast to $3,800/Oz, Predicts Rally to Continue Through 2026Gold is expected to continue its upward momentum throughout 2025 and into early 2026, driven by ongoing geopolitical tensions, macroeconomic challenges, and market anticipation of U.S. monetary easing, according to analysts from ANZ in a research note released Wednesday.
Author  Mitrade
Sept 10, Wed
Gold is expected to continue its upward momentum throughout 2025 and into early 2026, driven by ongoing geopolitical tensions, macroeconomic challenges, and market anticipation of U.S. monetary easing, according to analysts from ANZ in a research note released Wednesday.
placeholder
Samsung Electronics Forecasts Stronger-Than-Expected Q3 Profit on AI Demand Samsung forecasts Q3 profit of 12.1 trillion won, boosted by strong AI chip demand.
Author  Mitrade
Oct 14, Tue
Samsung forecasts Q3 profit of 12.1 trillion won, boosted by strong AI chip demand.
Related Instrument
goTop
quote