The Japanese Yen (JPY) weakens against the US Dollar (USD) during Thursday’s Asian session, though it holds close to its strongest level since October 2024, reached earlier this week. The downward movement follows Bank of Japan (BoJ) Governor Kazuo Ueda’s recent remarks suggesting the central bank could ramp up regular bond purchases if long-term interest rates surge, pushing Japanese government bond (JGB) yields lower.
However, the JPY’s depreciation remains modest as investors anticipate further BoJ interest rate hikes in response to broadening inflation in Japan. Meanwhile, expectations of a cooling US economy and potential Federal Reserve (Fed) rate cuts weigh on the USD, keeping the USD/JPY pair’s upside limited. Traders are also exercising caution ahead of Friday’s US Personal Consumption Expenditure (PCE) Price Index release — the Fed’s preferred inflation measure.
BoJ Rate Hike Bets Cushion JPY Despite Falling Bond Yields
Japan’s inflation rate in January accelerated at its fastest pace since mid-2023, reinforcing expectations of future BoJ rate hikes. Nonetheless, Ueda’s pledge to increase government bond purchases drove the 10-year JGB yield to its lowest level since February 12, weighing on the Yen and lifting the USD/JPY pair towards the mid-149.00s during Thursday’s Asian session.
On the global front, renewed trade tensions add further pressure on the JPY. US President Donald Trump announced plans to investigate copper imports for potential tariffs, while confirming that tariffs on Canadian and Mexican imports will proceed as scheduled. Trump also signaled forthcoming 25% tariffs on European Union imports, further heightening market uncertainty.
Meanwhile, downbeat US economic data has fueled speculation about Fed rate cuts, keeping USD bulls on the defensive. Atlanta Fed President Raphael Bostic reaffirmed the need to maintain current interest rates, despite progress in lowering inflation.
Technical Outlook: USD/JPY Faces Resistance at 150.00
The USD/JPY pair remains confined within a familiar range, reflecting a bearish consolidation phase following its January peak. Daily chart indicators stay in negative territory, suggesting the pair’s downward trajectory could persist.
Any upside movement is likely to face selling pressure near the 149.75-149.80 region, with the 150.00 psychological barrier acting as a key resistance level. A sustained break above this mark could trigger a short-covering rally, driving the pair toward 150.90-151.00.
On the downside, immediate support lies at the 149.00 round figure, followed by the 148.60 multi-month low. Further selling could drag the pair toward 148.00, with the next key support at 147.35-147.30 and the 147.00 psychological threshold.
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