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The U.S. dollar gained ground against the Japanese yen on Tuesday, closing near 155.75, up about 0.71% from the previous day. The pair opened at 154.64, dipped briefly to 154.52, and climbed as high as 156.28 before settling just below the 156.00 mark.
Why the Yen is Struggling
The yen remains under pressure as Japanese policymakers signal caution over further interest rate hikes. This hesitation contrasts with the Federal Reserve’s more hawkish stance, where officials continue to stress the need to keep inflation under control. The difference in approach between the two central banks has widened the gap in bond yields, favoring the dollar and drawing investor flows away from the yen.
Market Sentiment
Investor confidence in the U.S. economy remains firm, supported by stronger consumer confidence readings and a steady labor market. Meanwhile, uncertainty around global trade and tariffs has limited the yen’s appeal as a safe-haven currency.
Broader Currency Picture
– Euro/Dollar (EUR/USD): trading near 1.178, slightly weaker as the dollar firmed.
– Pound/Dollar (GBP/USD): around 1.351, showing modest gains despite dollar strength.
– Dollar/Yuan (USD/CNY): near 6.88, reflecting mild pressure on the yuan.
– Dollar/Swiss Franc (USD/CHF): around 0.77, with the franc holding steady.
The dollar’s rise against the yen highlights the impact of diverging monetary policies. As long as U.S. yields remain higher and the Fed maintains its cautious stance on rate cuts, the dollar is likely to stay supported. The yen, by contrast, faces headwinds from limited policy tightening and subdued investor demand.
For now, USD/JPY remains firmly above 155, with traders watching closely for fresh signals from both central banks that could determine whether the dollar extends its advantage or the yen stages a recovery.
