The Japanese Yen (JPY) retained its bullish footing in Thursday’s Asian session, as stronger-than-expected domestic inflation data and growing expectations of further monetary tightening by the Bank of Japan (BoJ) drove safe-haven demand. The USD/JPY pair slipped back toward the mid-146.00s, dragged down by a softer US Dollar (USD) and broad-based demand for the Yen.
Market sentiment surrounding Japan’s economic outlook was bolstered after the BoJ’s preliminary data showed Producer Price Index (PPI) inflation rose 0.4% in March and surged 4.2% year-on-year—both figures exceeding consensus expectations. The robust print strengthened bets that cost pressures may soon feed into consumer prices, reinforcing the case for continued BoJ rate hikes.
Adding to the Yen’s appeal were signs of potential progress on trade relations with the United States. US President Donald Trump reportedly agreed to open trade talks with Japan following discussions with Prime Minister Shigeru Ishiba. US Treasury Secretary Scott Bessent also hinted that Japan could become a priority in tariff negotiations, further supporting the JPY on optimism over a bilateral deal.
Meanwhile, the US Dollar faced headwinds amid persistent expectations for interest rate cuts by the Federal Reserve in 2025—a stark contrast to the BoJ’s more hawkish trajectory. Traders have scaled back their expectations for aggressive Fed easing after minutes from the March FOMC meeting showed officials cautiously balancing concerns over rising inflation and slowing growth. The market now anticipates only 75 basis points of Fed rate cuts by year-end, with the next move potentially delayed until June.
Despite Wednesday’s temporary USD rebound—fueled by Trump’s announcement of a 90-day pause on major tariff hikes, which spurred a historic 9.5% rally in the S&P 500—investors appear cautious ahead of upcoming US inflation reports. The Consumer Price Index (CPI) is due Thursday, followed by the Producer Price Index (PPI) on Friday. Both datasets are expected to offer fresh insight into the Fed’s policy path and could shift USD sentiment accordingly.
Technical Outlook:
From a technical standpoint, USD/JPY remains under pressure, with the pair repeatedly failing to sustain momentum above the key 148.00 resistance level. Oscillators on the daily chart remain in bearish territory, yet still distant from oversold conditions—signaling further downside potential.
Immediate support lies near the 146.30–146.25 zone. A decisive break below that level would likely open the door to 146.00, with further losses potentially extending to the 145.50 area and even the psychological 145.00 threshold.
On the upside, resistance is expected at 147.75 and the key 148.00 round figure. A sustained breakout above this zone could pave the way for a stronger rally toward 148.25–148.30, and eventually the 149.00 mark. Further bullish momentum may target the 149.35–149.40 region, with the 150.00 level acting as a major psychological barrier.
Until then, however, the path of least resistance for USD/JPY appears skewed to the downside, with investors awaiting inflation data for the next directional catalyst.
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