The USDJPY pair experienced a significant decline at the start of trading on Thursday (February 20, 2025), falling to 150.570. Compared to the closing price on Wednesday, USDJPY plummeted nearly 900 points (90 pips) and reached its lowest level in the past 10 weeks.
The drop in USDJPY was triggered by the failure of peace negotiations between Russia and Ukraine, which had been initiated by U.S. President Donald Trump. In fact, the Ukrainian representatives did not attend the negotiations, leading market participants to believe that the Russia-Ukraine conflict is unlikely to end anytime soon, thus increasing demand for safe haven assets.
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Both the US dollar and the yen are considered safe haven assets, but this time the yen has the upper hand. As March approaches, marking the end of Japan’s fiscal year, many corporations, institutional investors, and financial institutions are repatriating their funds and assets from abroad, boosting the yen’s exchange rate.
Additionally, the economic growth data for Japan (Gross Domestic Product/GDP) for the fourth quarter of 2024 was reported to have increased by 2.8% on a quarterly basis, surpassing the forecast by Trading Central of 2.1% and the previous quarter’s growth of 1.2%.
This data release has significantly opened the possibility for the Bank of Japan (BoJ) to raise interest rates in the near future, consequently putting pressure on the USDJPY pair.
On the other hand, Gold is shining once more, having recently broken its all-time high record at approximately $2,946 per troy ounce before correcting due to profit taking. This morning, Gold rose again, reaching a daily high of $2,942.32 per troy ounce.
The rise in Gold prices is also supported by expectations that central banks worldwide will continue to purchase this precious metal as a reserve due to the uncertainties surrounding the global economy, especially regarding trade war risks.
