Japanese Yen holds gains following Trade Balance data

• USD/JPY depreciates as the Japanese Yen holds gains following stronger-than-expected domestic trade balance data.
• Japan’s Trade Balance unexpectedly swung to a JPY 301.9 billion surplus in April, beating expected decline of JPY 29.7 billion.
• Trump stated US-Iran negotiations are in their final stages, threatening military action within days if Iran rejects his terms.

USD/JPY remains subdued for the second successive day, trading around 158.90 during the Asian hours on Thursday. The pair depreciates as the Japanese Yen (JPY) holds gains following the release of Japan’s Merchandise Trade Balance Total data.

Japan’s trade balance swung to a surplus of JPY 301.9 billion in April 2026, reversing a deficit of JPY 149.5 billion from the same period last year and significantly outperforming the market's projected JPY 29.7 billion shortfall.

Japan’s Exports surged by 14.8% year-on-year to a near-record JPY 10,507.3 billion, accelerating from an 11.5% increase in March and recording the strongest growth in three months. Over the same period, Imports grew by 9.7% to JPY 10,205.4 billion. While this represents a slight deceleration from the 10.9% gain seen in March, the figure still surpassed market expectations of an 8.3% increase.

The USD/JPY pair maintains its recent losses as the US Dollar (USD) holds steady following a decline the previous day. Market participants are closely monitoring the economic implications of stalled peace negotiations between the United States (US) and Iran, alongside heightened threats to the critical Strait of Hormuz shipping lane.

A Bloomberg report on Wednesday indicated that US President Donald Trump characterized the ongoing negotiations with Iran as being in their final stages. However, President Trump also reiterated a firm pledge to resume military actions within days if Iran rejects his terms. In response, Iranian President Masoud Pezeshkian emphasized that Tehran has no intention of capitulating, stating on the social media platform X that attempting to force a surrender through coercion is nothing more than an illusion.