The Japanese currency struggles to attract safe-haven demand as traders prefer to buy US dollars instead

The Japanese yen has been on weak footing these days, struggling around November lows as the US dollar keeps rallying across the board. The USDJPY pair keeps rising for the third session in a row on Tuesday, flirting with the 147.00 mark after last week’s rally to 147.35 for the first time in nine months.

Still, traders continue to expect the yen to see some gains in the near term due to a possible intervention by Japanese officials to shore up the ailing currency. As a reminder, the Japanese Finance Minister signaled no clear sign of intervening in the market. Market participants were disappointed by the lack of determination, especially as authorities intervened last September, when the USDJPY pair breached the 145.00 mark.

As authorities sit on their hands, the national currency could see further losses as traders continue to raise bets that the US Federal Reserve could continue hiking interest rates, or at least keep them higher for longer. By contrast, the Bank of Japan maintains its ultra-loose policy, remaining an outlier among global central banks.

Against this backdrop, the yen could fall to fresh cyclical lows, especially as the US economy looks resilient, suggesting the Fed may push the dollar even higher by another rate hike this year. Now that USDJPY has settled above 147.00, the next target for USD bulls arrives at 147.50. A decisive break above this zone would pave the way towards the 148.00 threshold.

Of note, the Japanese currency struggles to attract safe-haven demand as traders prefer to buy US dollars instead, focusing on the path of the central bank’s monetary policy. Still, economic output in Japan grew by an annualized rate of 6$ in the second quarter to mark the third consecutive quarter of expansion.


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