Japanese Yen has continued to fall for the third straight day, after the Bank of Japan (BoJ) left its policy rate unchanged at 0.5% and cut its inflation and growth projections. The BoJ’s conservative attitude, in anticipation of US tariffs and a potential de-escalation of US-China trade tensions, has prompted the weakening of the Yen. Investors are now turning to BoJ Governor Kazuo Ueda’s next words for clues on the direction of interest rates ahead, with hopes that the BoJ will lift rates in 2025. Even so, wider market forces, such as softening US economic numbers and even potential Federal Reserve rate cuts down the road, indicate the Yen can hold some support in the near term, with traders keeping close watch on key technical levels for further guidance.
KEY LOOKOUTS
• Market participants are eagerly looking forward to the remarks of BoJ Governor Kazuo Ueda to take cues on future possible rate increases and the central bank’s views on inflation and economic growth, which will decide the direction of the Yen.
• The recent US GDP decline and soft ADP employment numbers are sparking fears of a possible US recession, which can impact the monetary policy of the Fed and the USD/JPY pair.
• US-China trade talks developments, or any potential easing, have the potential to meaningfully affect sentiment in markets, with potential to influence the safe-haven demand of the Yen.
• The USD/JPY currency pair is making a move toward a critical resistance point at 144.00. A breakout here could trigger more gains, or a drop below 142.60 might bring momentum back into the hands of Yen bulls.
Japanese Yen is under sustained pressure after the Bank of Japan left rates unchanged at 0.5% and reduced its growth and inflation projections, indicating a more dovish stance. Market participants are now looking to BoJ Governor Kazuo Ueda’s next comments to gauge the central bank’s future rate-hike path, with some speculating that rates could increase in 2025 as inflation slowly accelerates. Meanwhile, softer US economic news, such as a decline in GDP and less-than-anticipated private-sector job growth, may induce a more dovish Federal Reserve policy, potentially favoring the Yen. In the meantime, global risk sentiment, such as any US-China trade talks news, will be important in determining near-term direction for the Yen. Important technical levels for the USD/JPY pair are also in the spotlight, with resistance at 144.00 and support at 142.60 guiding the next possible directions.
The Japanese Yen remains soft in the wake of BoJ’s dovish bias, with the market anticipating Governor Ueda’s words for clues on upcoming rate hikes. Downward revisions in US economic data and global trade news bring added uncertainty, with major technical levels for USD/JPY still firmly in the market’s sights for possible action.
• The Bank of Japan maintained its policy rate at 0.5% and reduced its growth and inflation projections, indicating a conservative stance.
• Market participants are looking for clues from BoJ Governor Kazuo Ueda on future rate hikes, with speculation of a rate hike in 2025.
• US GDP fell in Q1 2025, and private-sector employment figures were lower than expected, sparking fears of a recession.
• Expectations of Fed rate reductions later in the year by the markets may pressure the US Dollar, propping up the lower-yielding Yen.
• Any news in US-China trade negotiations, especially de-escalation, may impact risk sentiment and trigger demand for the Yen as a safe-haven currency.
• Important resistance at 144.00 and support at 142.60 are key levels for the USD/JPY pair, dictating future possible price movements.
• The BoJ’s projection of inflation at around 2% over the period 2027 implies Japan’s economic situation is going to have a major influence on future monetary policy.
The Japanese Yen has been under stress after the Bank of Japan’s (BoJ) announcement to maintain its policy rate unchanged at 0.5% alongside reducing its forecast for economic growth and inflation. This action mirrors the BoJ’s conservative perspective under the cloud of global trade tensions, especially with the US. The central bank has stated that it will also keep economic conditions under close observation, though while lowering its near-term inflation estimates, it maintained that it expected inflation to stick around its 2% goal in the medium term. Market focus now shifts to remarks from BoJ Governor Kazuo Ueda, who should also offer clarity regarding the way ahead for interest rates.
USD/JPY Daily Price Chart
Sources: TradingView
Deteriorating US economic fundamentals, also comprising a negative print in GDP along with muted-than-forecast private sector employment, accompany weakening Yen. These events have fueled speculation that the Federal Reserve will reduce rates in the near term, potentially supporting the Yen as a lower-yielding currency. Furthermore, continued uncertainties surrounding global trade, especially US-China relations, can have profound effects on market sentiment and the Yen as a safe-haven asset. With these dynamics changing, investors will be keeping a close eye on any commentary from central banks and major economic indicators that could impact the path of the Yen over the next few months.
TECHNICAL ANALYSIS
USD/JPY pair is probing important resistance points, and the 144.00 level has become an important stumbling block. A move above the level would indicate more bullish pressure, which could propel the pair into higher resistance areas. On the negative, the 142.60-142.65 region is regarded as key support, and a break below this region could spark a turnaround, moving the pair downward. The 100-period Simple Moving Average (SMA) on the 4-hour chart is also acting as support, while the general market sentiment, guided by the BoJ’s dovish policy and US economic releases, will probably drive the next significant moves. The sellers will be keeping a close eye on these technical levels in order to decide the direction of the pair in the near future.
FORECAST
USD/JPY pair crosses above the 144.00 resistance level, it may create further upside momentum, with the next important target in the vicinity of the 144.60-144.65 zone. This will indicate a continuation of the current bullish trend, driven by the expectations of future Fed rate cuts and ongoing fears about global economic growth. The soft US economic numbers, including the decline in GDP and lower job numbers, may also prompt investors to look for higher returns in the US Dollar, pushing the pair further higher. If risk appetite improves, especially with easing US-China trade tensions, the USD/JPY may see a push towards the 145.00 psychological level.
Conversely, if the USD/JPY pair is not able to maintain itself above the 143.00 level, it may extend a pullback towards the major support levels at 142.60-142.65. A breakdown below here may leave further selling potential with the pair looking to target the 142.00 area. Items like better-than-anticipated Japanese data or more dovish Fed rhetoric may be contributors to this downside scenario. Moreover, if the market begins to prefer the Yen as a safe-haven currency with deteriorating global economic prospects or geopolitical tensions, it may cause a steeper fall in the USD/JPY pair.
