The Japanese yen extended its rally for a third consecutive session in Asian trading Thursday, climbing to a three-week high against the U.S. dollar as risk aversion swept through global markets. The currency’s safe-haven appeal strengthened significantly following President Trump’s announcement of aggressive new tariffs targeting multiple economies, which has raised concerns about potential global trade disruptions and economic slowdown.
The yen’s gains were further supported by a sharp decline in U.S. Treasury yields, as investors rushed into government bonds amid growing recession fears. Benchmark 10-year yields fell to their lowest level in over a month as the tariff measures prompted a broad reassessment of growth prospects. This bond market movement reflects increasing expectations that the Federal Reserve may need to accelerate interest rate cuts to counter potential economic headwinds from escalating trade tensions.
Market sentiment remains fragile, with the yen’s strength indicating persistent concerns about the tariff measures’ broader economic impact. Technical indicators suggest the currency may test higher resistance levels if risk aversion persists, particularly as traders await key U.S. economic data and any potential retaliatory measures from affected trading partners. The simultaneous rise in haven demand and decline in Treasury yields underscores how quickly market dynamics have shifted following the trade policy announcement.
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