The Japanese Yen held steady on Wednesday as turbulence in the bond market continued to draw attention to the fiscal stability of major economies.

Meanwhile, the US Dollar remained strong, supported by positive consumer confidence data and optimism surrounding potential new US trade agreements.

The Yen edged down to 144.14 per Dollar, following a 1% decline on Tuesday after a Reuters report indicated that Japan is considering reducing the issuance of super-long-term bonds in response to a recent surge in yields.

Attention stayed centred on Japan’s bond market on Wednesday, as demand at an auction for the country’s longest-maturity bonds dropped to its lowest level since July.

“Despite the news flow, there does appear to be some certain level of resistance in Dollar-Yen,” said Rabobank strategist Jane Foley.

The Yen has appreciated by nearly 9% so far in 2025, driven by broad weakness in the US Dollar and increased demand for safe-haven assets, as investors pull back from US markets amid the volatility sparked by President Donald Trump’s unpredictable trade policies.

Meanwhile, the Dollar index, which tracks the greenback against six major peers, was last up 0.08% at 99.608. However, it remains down 8% for the year, reflecting a broader shift by investors toward non-US assets.

Furthermore, the Euro held steady at $1.1321 on Wednesday, after falling 0.5% the previous day as a wave of Dollar buying swept through the markets, Reuters reports.

The surge in demand for the Dollar was fuelled by optimism over potential trade agreements and stronger-than-expected US consumer confidence data for May.

However, other US economic indicators painted a less optimistic picture. Data released on Tuesday showed that new orders for core capital goods fell by the most in six months in April, highlighting the damaging effects of ongoing tariff volatility on the economy and corporate spending.

“More positive data surprises are needed to rebuild confidence in US growth, and deficit worries aren't disappearing anytime soon,” said ING FX strategist Francesco Pesole.

“When adding the themes of de-dollarisation and Trump's plans for a weaker Dollar in the longer run, we still think the greenback rallies can fade from here.”

Moreover, Sterling was last trading at $1.3504 at the time of writing, remaining near the three-year high it reached on Monday.