The Japanese Yen (JPY) maintained its gains following the release of Japan’s Merchandise Trade Balance Total data, causing the USD/JPY pair to remain subdued for the second consecutive day, trading around 158.90 during Asian hours on Thursday [1]. Japan’s trade balance swung to a surplus of JPY 301.9 billion in April 2026, reversing a deficit of JPY 149.5 billion from the same period last year and significantly outperforming market expectations, which had projected a JPY 29.7 billion shortfall [1].
Exports from Japan surged by 14.8% year-on-year to nearly JPY 10,507.3 billion, marking the strongest growth in three months and accelerating from an 11.5% increase in March [1]. Imports also rose by 9.7% to JPY 10,205.4 billion, a slight deceleration from the 10.9% gain in March, but still above the market’s expected 8.3% increase [1]. The robust export performance and higher-than-expected import growth contributed to the positive trade balance, which is a key indicator for Japan’s export-dependent economy [1].
Market participants are also monitoring geopolitical developments, particularly the stalled peace negotiations between the United States and Iran and the associated risks to the Strait of Hormuz shipping lane [1]. According to a Bloomberg report, US President Donald Trump described the negotiations as being in their final stages but warned of imminent military action if Iran rejects US terms, while Iranian President Masoud Pezeshkian stated that Tehran would not capitulate to coercion [1].
The combination of a strong trade surplus and ongoing geopolitical tensions has kept the USD/JPY pair under pressure, with the US Dollar holding steady after a previous decline [1].
CONCLUSION
Japan’s unexpected trade surplus and robust export growth have supported the Japanese Yen, keeping the USD/JPY pair subdued. Market attention remains focused on both Japan’s economic performance and geopolitical risks, which could influence currency movements in the near term.