The Japanese Yen (JPY) remains on the back foot against its American counterpart, with the USD/JPY pair eyeing the 156.00 mark during the early European session on Tuesday. US President Donald Trump reiterated his push for higher universal tariffs,

The Japanese Yen continues to draw support from the BoJ's hawkish interest rate hike on Friday. The divergent BoJ-Fed outlook and narrowing US-Japan yield differential favor the JPY bulls. Fed rate cut bets could act as a headwind for the buck and further cap gains for the USD/JPY pair.

Japanese investors raised their holdings in foreign stocks, driven by a benign U.S. core inflation report that fuelled expectations of Federal Reserve cuts and boosted global equities, while a strong yen also lifted domestic buying power.

Asian stocks have advanced in thin Lunar New Year trading following a rebound on Wall Street driven by tech stocks as the panic over Chinese AI company DeepSeek faded. Most markets in Asia were closed on Wednesday.

The Japanese yen and the Swiss franc gained against major currencies on Monday amid a selloff in technology stocks as markets weighed the implications of a Chinese startup launching a free open-source artificial intelligence model.

The gap could widen even further, and exacerbate pressure on the yen, if the Federal Reserve’s preferred ... and a lot of very public pushback from Japanese officials,” said Joe Capurso ...

The U.S. dollar weakened against the yen on Thursday, as softer-than-expected U.S. economic data and growing confidence for a Bank of Japan interest-rate hike sent it tumbling to a near one-month low against the Japanese currency.

Looking back, yen-funded carry trades have turned out to be among the most profitable plays this year. Of 20 major emerging markets currencies, all generated positive total returns, led by the Turkish lira’s 19% and Mexican peso’s 14%.

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Japanese markets eked out modest gains despite the yen's rise amid speculation of a BoJ rate hike next week. The Nikkei average edged up by 0.33 percent to 38,572.60 while the broader Topix index settled marginally lower at 2,688.31.

The Bank of Japan hiked interest rates on Friday to their highest level in 17 years and signalled more were in the pipeline despite fears of turmoil under US President Donald Trump.

Japan's central bank has raised its key interest rate to about 0.5% from 0.25%, noting that inflation is holding at a desirable target level.