Japanese Yen advances to multi-week top against USD amid trade war concerns

The Japanese Yen benefits from Trump’s tariff threats and the recent fall in the US bond yields.

The USD struggles to lure buyers and drags the USD/JPY pair to a three-week low on Wednesday.

Traders now look to the prelim US Q3 GDP print and the US PCE Price Index for a fresh impetus.

The Japanese Yen (JPY) continues to attract some haven flows in the wake of US President-elect Donald Trump's tariff threats. Moreover, the recent pullback in the US Treasury bond yields, which followed Scott Bessent's nomination as the US Treasury Secretary and expectations that he would restrain budget deficits, offers additional support to the lower-yielding JPY. This, along with subdued US Dollar (USD) price action, drags the USD/JPY pair to a nearly three-week low, around the 152.70-152.65 area, during the Asian session on Wednesday. 

That said, the uncertainty tied to another interest rate hike by the Bank of Japan (BoJ) in December might hold back traders from placing aggressive JPY bullish bets. Meanwhile, easing geopolitical tensions, amid a ceasefire deal between Israel and Hezbollah, might contribute to capping gains for the safe-haven JPY. The USD, on the other hand, is likely to draw support from bets for slower interest rate cuts by the Federal Reserve (Fed), which could further offer some support to the USD/JPY pair ahead of the key US macro data due later today.