The Japanese Yen (JPY) drifts lower against its American counterpart for the second successive day on Wednesday and retreats further from a multi-month peak touched the previous day. Upbeat comments from Trump administration officials about US-China trade talks trigger a sharp recovery in the global risk sentiment, which, in turn, weighs heavily on traditional safe-haven assets, including the JPY. Moreover, some follow-through US Dollar (USD) recovery from a multi-year low, bolstered by easing fears about the Federal Reserve's (Fed) independence, pushed the USD/JPY pair to a one-week high – a level beyond the 143.00 mark during the Asian session.

The growing optimism that the US and Japan are moving closer to an interim arrangement on trade helps the JPY, which reacted little to rather unimpressive domestic PMIs, in stalling the intraday slide. Adding to this, firming expectations that the Bank of Japan (BoJ) will continue raising interest rates in 2025 hold back the JPY bears from placing aggressive bets. Meanwhile, investors have been losing confidence in the US economy on the back of Trump's rapidly shifting stance on trade policies. This, along with bets that the Fed will resume its rate-cutting cycle soon, caps the Greenback and drags the USD/JPY pair below the 142.00 mark in the last hour.
The global risk sentiment gets a strong boost after US Treasury Secretary Scott Bessent said at a private investor summit that the tit-for-tat tariff war between the US and China would de-escalate soon. Later, White House spokeswoman Karoline Leavitt told reporters that the Trump administration is setting the stage for a deal. This, in turn, contributes to improving investors' appetite for riskier assets and driving flows away from perceived safe-haven assets, including the Japanese Yen.

The Japanese Yen (JPY) drifts lower against its American counterpart for the second successive day on Wednesday and retreats further from a multi-month peak touched the previous day. Upbeat comments from Trump administration officials about US-China trade talks trigger a sharp recovery in the global risk sentiment, which, in turn, weighs heavily on traditional safe-haven assets, including the JPY. Moreover, some follow-through US Dollar (USD) recovery from a multi-year low, bolstered by easing fears about the Federal Reserve's (Fed) independence, pushed the USD/JPY pair to a one-week high – a level beyond the 143.00 mark during the Asian session.

The growing optimism that the US and Japan are moving closer to an interim arrangement on trade helps the JPY, which reacted little to rather unimpressive domestic PMIs, in stalling the intraday slide. Adding to this, firming expectations that the Bank of Japan (BoJ) will continue raising interest rates in 2025 hold back the JPY bears from placing aggressive bets. Meanwhile, investors have been losing confidence in the US economy on the back of Trump's rapidly shifting stance on trade policies. This, along with bets that the Fed will resume its rate-cutting cycle soon, caps the Greenback and drags the USD/JPY pair below the 142.00 mark in the last hour.
The global risk sentiment gets a strong boost after US Treasury Secretary Scott Bessent said at a private investor summit that the tit-for-tat tariff war between the US and China would de-escalate soon. Later, White House spokeswoman Karoline Leavitt told reporters that the Trump administration is setting the stage for a deal. This, in turn, contributes to improving investors' appetite for riskier assets and driving flows away from perceived safe-haven assets, including the Japanese Yen.

Source: Fxstreet