Forex Analysis & Reviews: 22.05.2025 - The Yen Goes on a Buyer...

Live Chat

InstaForex - Official partner of Dragon Racing

This section features the most important information about trading with InstaForex. We provide both analysis from leading experts for experienced traders and articles on trading conditions for beginners. Our services will help increase your profit potential.

Become Trader

Account Opening

See also

Trading Conditions

Forex Analytics

Charts

This section is designed for those who are just starting their trading journey. InstaForex educational and analytical materials will meet your training needs. Our experts' recommendations will make your first steps to trading success simple and clear.

Start as Beginner

How to start trading

Useful information

Training and recordings

InstaForex innovative services are an essential element of productive investment. We strive to provide our clients with advanced technical capabilities and make their trading routine comfortable as we are recognized as the best broker in this regard.

Become Investor

PAMM System

ForexCopy System

Passive investments

OYS account

Partnership with InstaForex is beneficial and top-tier. Join our affiliate programs and enjoy bonuses, partner rewards, and the possibility to travel with the team of the world-renowned brand.

Become Partner

Main Page

Partner Area

Advantages for Affiliates

Registration

This section contains the most lucrative offers from InstaForex. Receive bonuses when topping up an account, compete with other traders, and get real prizes even when trading in a demo account.

All Promo Campaigns

Bonuses

Contests

Events

Holidays with InstaForex are not only pleasant but also useful. We offer a one-stop portal, numerous forums, and corporate blogs, where traders can exchange experiences and become successfully integrated into the Forex community.

Full details

Forums

We are in social networks

Forex humour

Forex Portal

InstaForex is an international brand created in 2007. The company provides services for online FX trading and is recognized as one of the world's leading brokers. We have won the trust of more than 7,000,000 retail traders, who have already appreciated our reliability and focus on innovations.

Learn More

History

Why Choose Us

InstaSport

Regulation

Company News

Awards

InstaForex Stars

InstaForex Offline

Headquarters

Key documents

Social Responsibility

InstaForex Loprais Team - Official participant of the Dakar rally

22.05.2025 12:05 AM

The Yen Goes on a Buyer Strike

A collapse in confidence in the U.S. dollar, rumors of coordinated currency intervention, and capital repatriation to Japan are driving USD/JPY back into a downtrend. The music playing in the bulls' camp, based on speculation that the Bank of Japan would not raise the overnight rate in 2025, didn't last long. The pullback turned into an excellent opportunity to enter short positions.

As the G7 summit of finance ministers and central bank governors in Canada nears, speculation about a coordinated intervention in the foreign exchange market to weaken the U.S. dollar is intensifying. Parallels are being drawn with 1985, when the Plaza Accord saw the U.S. compel its allies to strengthen their currencies, causing a sharp drop in the USD index: Donald Trump, notably, dreams of a weaker dollar to boost the competitiveness of American companies.

However, the growing risk of large-scale intervention isn't the only reason USD/JPY is declining. Japan is experiencing a so-called "buyer strike," which is driving up local bond yields at the fastest pace among developed nations, increasing debt servicing costs, and becoming a headache for the government.

Supply and Demand for Japanese Bonds

The BoJ has redeemed more bonds from its balance sheet than it has purchased anew. Tokyo needs to fill the gap with new issuances, but the Ministry of Finance is struggling to find buyers in the primary market, as investors prefer the secondary market amid rising yields.

According to BoJ and Bloomberg data, net bond issuance has reached the highest levels since 2010, with supply outpacing demand. This has led to falling prices and rising yields. The yield spread between Japanese and U.S. bonds is narrowing, prompting capital repatriation to Japan and further pushing USD/JPY down.

The yen's strengthening is happening amid rising global risk appetite, which is somewhat puzzling. Typically, safe-haven assets come under pressure in such conditions. However, the bears in USD/JPY have plenty of arguments to push the pair south.

Japan's Export Trends

They aren't even deterred by the significant slowdown in April's exports, from +4% to +2%, which has been linked to sweeping tariffs imposed by the White House. In reality, exports to the U.S. declined by just 1.8%, while European exports dropped by 5.2%. Regardless, the disruption in trade relations will ultimately reduce foreign trade volumes, negatively impacting the economy and likely preventing the BoJ from resuming monetary policy normalization.

Technical Outlook

Technically, on the daily chart, USD/JPY has fulfilled the previously identified reversal pattern "Three Indians." The first target from shorts initiated at 147.1, down to 144.5, was successfully hit. Now, two more targets at 142.5 and 140.0 remain. It makes sense to hold short positions and consider adding to them periodically.

You have already liked this post today

*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.

If you have any content questions, please contact editorial-board@instaforex.com

# USD # JPY # USDJPY Fundamental analysis