Market Insights > Daily Market Analysis

12 June 2025,02:43

Daily Market Analysis

Yen Softens as Risk Sentiment Improves; BoJ Policy Shift in Focus

12 June 2025, 02:43

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Key Takeaways:

*The market was focused on the U.S.-China new round of trade talks, which were extended to Tuesday.

*A positive tone from President Trump at the event hammered the safe-haven gold in the last session.

*Wall Street holds a “wait-and-see” mood, eyeing the trade talk outcome.

Market Summary:

The Japanese Yen weakened as investor risk appetite improved following the constructive outcome of U.S.-China trade talks in London. Both delegations reaffirmed the framework established in Geneva, easing global trade tensions and diminishing demand for traditional safe-haven assets like the Yen. However, underlying uncertainty remains after a U.S. court upheld the extension of “Liberation Day” tariffs by President Trump, keeping trade-related risks in play.

Safe-Haven Appeal Muted Amid Geopolitical Risks
Despite renewed geopolitical tensions—exacerbated by the failure of Ukraine-Russia peace negotiations—the Yen attracted only limited safe-haven inflows. This underscores the market’s current preference for risk assets, particularly in an environment where equity markets are buoyed by improving global trade dynamics.

BoJ Hawkish Tilt Could Limit Further Yen Weakness
On the domestic front, the Bank of Japan has adopted a slightly more hawkish tone in response to encouraging economic indicators, sparking speculation about further policy normalization. While not yet signaling imminent tightening, the BoJ’s shift in tone may serve as a backstop against deeper JPY depreciation.

Outlook: JPY Faces Dual Forces
The Yen remains under near-term pressure from a risk-on global environment, yet prospects of a more assertive BoJ stance could provide medium-term support. Traders should monitor BoJ commentary and inflation data for clues on policy direction, which may influence JPY resilience amid shifting global sentiment.

Technical Analysis:

EURJPY, H4

The EUR/JPY pair has flashed a notable bullish signal after breaking decisively above a key resistance level at 165.15 that had capped gains since November. This breakout marks a significant shift in market structure, suggesting growing upside potential—provided the pair can sustain above this level to confirm the move and dispel concerns of a false breakout.

Momentum indicators support the bullish outlook. The Relative Strength Index (RSI) is approaching overbought territory, indicating strong buying interest. Meanwhile, the Moving Average Convergence Divergence (MACD) has continued to trend higher, reinforcing the view that upward momentum is strengthening.

If EUR/JPY holds above the breakout zone in the coming sessions, it would validate the bullish breakout and open the door for further gains. Traders should monitor for follow-through price action and volume confirmation to gauge the sustainability of the current rally.

Resistance levels: 167.10, 169.40

Support levels: 165.15, 163.00

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