Japanese Yen Gains Amid Uncertainty

During Tuesday’s European session, the Japanese yen strengthened against major currencies as European stocks fell amid persistent trade tensions and investor caution ahead of the upcoming European Central Bank policy meeting.

Meanwhile, the OECD has lowered its global growth projection for 2025 to 2.9% from 3.1%, citing rising trade barriers and policy uncertainty that are dampening consumer confidence and slowing investments across the globe.

The yen’s role as a safe-haven currency is further supported by ongoing geopolitical concerns, notably the prolonged Russia-Ukraine conflict and escalating trade disputes.

In other economic news, the Bank of Japan reported a 3.4% year-on-year drop in its monetary base during May, amounting to 656.0 trillion yen, a smaller decline than the forecast 4.2% drop following a 4.8% contraction in April.

In European trading, the yen reached a 4-day high of 162.80 against the euro and an 8-day high of 192.73 against the British pound, recovering from earlier lows of 163.71 and 193.81. The currency could face resistance near 161.00 against the euro and around 190.00 against the pound.

Against the U.S. dollar and the Swiss franc, the yen improved to 142.61 and 174.32 respectively, rising from previous lows of 143.27 and 175.05. Analysts expect resistance levels at approximately 161.00 versus the euro, 190.00 versus the pound, 138.00 versus the dollar, and 170.00 versus the franc.

Looking ahead, several U.S. economic indicators – including the U.S. Redbook report, April’s factory orders, and the June U.S. RCM/TIPP Economic Optimism Index – are scheduled to be released during the New York session.