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Currencies USD/JPY

Japanese Yen Weakens on BoJ’s Dovish Forecast, Traders Look to Governor Ueda’s Remarks for Rate-Hike Hints in the Future

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  • May 1, 2025
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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

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Currencies USD/JPY

USD/JPY Falls Below 142.50 as Japanese Inflation Remains Strong and US Data Provides Mixed Signals

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  • April 18, 2025
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The USD/JPY currency pair fell below the 142.50 level in Friday’s early Asian session, as the Yen was strengthened by higher-than-anticipated Japanese inflation data. Japan’s Consumer Price Index (CPI) increased 3.6% from year earlier in March, with core CPI rising to 3.2%, meeting market forecasts but supporting the Bank of Japan’s conservative view on policy tightening in the context of external uncertainties, including U.S. tariffs. In contrast, the U.S. dollar fared poorly even as Initial Jobless Claims decreased to a two-month low, as weaker manufacturing data from the Philadelphia Fed Index triggered worries over economic momentum. The blend of resilient Japanese inflation and conflicting U.S. data held the Yen strong, though possible upside is still constrained by cautious central bank cues. KEY LOOKOUTS • Japan’s March CPI data revealed ongoing price pressures, supporting the Yen and questioning the Bank of Japan’s next policy steps. • Even with robust inflation numbers, BoJ authorities, including Governor Ueda, are hesitant to increase rates further, highlighting that uncertainties must be watched, particularly those related to U.S. tariff movements. • Although U.S. Initial Jobless Claims fell to a two-month low, indicating the labor market’s stability, the Philadelphia Fed Index fell short of expectations, which suggested manufacturing weakness. • Markets are keeping close eyes on ongoing trade talks between Japan and the U.S., which may continue to impact currency trends as tensions escalate in global trade. The USD/JPY pair comes under renewed stress with Japan’s March inflation readings highlighting ongoing price growth, lending strength to projections of a dovish but firm economic scenario. Though the stronger CPI readings had earlier boosted the Yen, cues from the Bank of Japan indicating patience regarding coming rate hikes have subdued bullish exuberance. Meanwhile, confusing U.S. economic signals — with unemployment claims falling to a two-month low and manufacturing figures coming in weaker than expected — have kept the U.S. dollar on the defensive. The continuing trade talks between Japan and the U.S. will most probably continue to be a priority for investors, as policy and global trade risks continue to influence market mood in the next few sessions. USD/JPY pair fell under 142.50 following strong Japan’s March inflation that drove up the Yen. Still, BoJ’s dovish position regarding interest hikes and on-going U.S.-Japan trade discussions will act as a deterrent against further gains of JPY. Hesitant U.S. data further exacerbated the weakness in the Dollar earlier in the day in Asian time. • USD/JPY fell under 142.50 in early Asia trading Friday due to better-than-expected Japanese inflation numbers. •  Japan’s March CPI increased 3.6% YoY, down modestly from 3.7% earlier but still showing sustained price firmness. • Core CPI (excluding fresh food) rose to 3.2%, in line with expectations and showing stable underlying inflation. •  BoJ officials indicated restraint on rate hikes, pointing to overseas uncertainties, particularly over U.S. tariff policies. •  The U.S. Initial Jobless Claims declined to a two-month low, showing sustained labor market robustness. •  Philadelphia Fed Index decreased, falling below expectations and prompting worries about the health of U.S. manufacturing. •  Market attention centers on Japan-U.S. trade negotiations, which may determine direction of currencies and markets in the future amidst tariff tensions. Japan’s recent inflation figures showed that consumer prices were still high in March, as the National Consumer Price Index (CPI) increased 3.6% from one year ago. Core inflation, which excludes fresh food, came in at 3.2%, matching market expectations and suggesting steady price growth despite a slight cooling from previous months. The data reflects the ongoing impact of cost pressures on the Japanese economy, while policymakers at the Bank of Japan continue to approach future rate decisions with caution, citing global uncertainties, including the effects of U.S. tariff policies. USD/JPY DAILY PRICE CHART CHART SOURCE: TradingView At the same time, American economic indicators offered a mixed view. Initial Jobless Claims decreased to their two-month lowest level, reflecting a robust labor market. Yet the Philadelphia Fed Index of regional manufacturing activity lagged expectations and caused worries for the health of the manufacturing sector. Investors also monitor the developments of Japan-U.S. trade talks, as negotiations on tariffs and economic cooperation are ongoing between the highest authorities from both nations. TECHNICAL ANALYSIS USD/JPY pair is demonstrating bearish strength after breaking down below the 142.50 support level, which points to further declines if the sellers hold on to power. The pair is oscillating around the 142.20–142.25 zone, which has become an immediate support, and any attempts to bounce back might get resistance at around the 142.80–143.00 zone. The Relative Strength Index (RSI) on the lower timeframes indicates a weak oversold condition, pointing toward the likelihood of a short-term corrective bounce or consolidation preceding the next direction. Market participants will carefully observe price action around these crucial levels for additional indications. FORECAST USD/JPY pair is able to remain above the 142.20 support level and attracts some demand, it may try to stage a recovery towards the 142.80–143.00 resistance area. A continued breakout above here could pave the way for more upside, particularly if U.S. economic statistics surprise on the upside or if risk appetite picks up in international markets. Second, any hint of policy divergence among the Federal Reserve and the Bank of Japan — while the Fed remains resolute on interest rates — could also give a boost to a stronger Dollar in the short term. On the downside, if USD/JPY breaks and settles below the 142.20 support level, it could trigger fresh selling pressure, leading the pair toward the next support around the 141.50 region. Continued strength in Japanese inflation, combined with global trade tensions and weaker U.S. manufacturing indicators, could weigh further on the pair. In this scenario, sellers might target lower levels as investor sentiment leans toward safe-haven assets like the Japanese Yen.

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