Japanese yen nears 140 per dollar amid trade risks and Fed pressure

The Japanese yen strengthened to 139.90 against the dollar, marking its biggest gain among G10 currencies on Tuesday and its strongest performance since September 2024. The yen's rally came amid escalating US-China trade tensions fueled by Donald Trump’s policies, as well as growing uncertainty over the potential removal of the US Federal Reserve Chair.

Hideki Shibata, senior strategist at Tokai Tokyo Intelligence Laboratory, noted that technical factors are currently supporting further yen appreciation. Meanwhile, according to US Commodity Futures Trading Commission (CFTC) data, speculative traders are showing record optimism about further rise of the Japanese currency.

The upcoming meeting this week between Japan's Finance Minister Katsunobu Kato and US Treasury Secretary Scott Bessent is also influencing market sentiment. Bloomberg notes that lingering pessimism toward the US market is further boosting investor interest in the yen as a safe-haven asset.