4 July 2025,03:25
Daily Market Analysis
4 July 2025, 03:25
Key Takeaways:
*The Japanese yen experienced significant volatility, initially strengthening on safe-haven demand as concerns grew over the U.S. fiscal outlook tied to the “Big and Beautiful” tax cut bill.
*President Trump has signaled readiness to escalate tariffs if no agreement is reached by next week’s deadline, adding to market uncertainty.
Market Summary:
The Japanese yen faced notable volatility in the recent session, driven by shifting sentiment in global financial markets and the ongoing developments in trade negotiations between Japan and the United States.
The yen initially found support after briefly dipping to its monthly low, as risk-off sentiment prompted investors to seek safety in haven currencies. Market participants grew increasingly concerned over the passage of the Trump administration’s controversial “Big and Beautiful” bill, which is expected to exacerbate the already fragile U.S. sovereign debt outlook. This uncertainty buoyed the yen against most of its major peers.
However, sentiment around the yen weakened as trade talks between Japan and the U.S. reportedly took a negative turn. Negotiations have faltered, with no agreement in sight, raising the prospect of fresh U.S. tariffs on Japanese imports—potentially at levels higher than those outlined under the initial “Liberation Day” tariff policy introduced in April. President Trump has signaled his readiness to escalate tariffs should no deal be reached ahead of next week’s deadline.
The heightened trade tensions have pressured the yen, though a window of opportunity remains for both nations to return to the negotiating table. Should any breakthrough materialize, the yen could regain strength in the near term as risk sentiment improves.
The EURJPY pair continued its upward trajectory, forming a series of higher lows and breaking to fresh highs following a period of price consolidation. The pair has surged to its highest level since July of last year, decisively clearing the psychological 170.00 mark—reinforcing a bullish bias for the cross.
Momentum indicators align with the bullish outlook. The Relative Strength Index (RSI) is hovering near the overbought zone, signaling strong buying pressure, while the MACD has formed a bullish golden cross above the zero line, suggesting that fresh upward momentum is gaining traction.
Should the pair maintain its position above the 170.00 threshold, EURJPY may be poised to challenge higher resistance levels in the sessions ahead, supported by favorable technicals and broader risk appetite.
Resistance levels: 171.45, 173.45
Support levels: 169.40, 167.10
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