JPY struggles to lure buyers; looks to BoJ Governor Ueda’s speech for fresh impetus

• The Japanese Yen attracts some sellers following the release of softer domestic data.
• A modest USD recovery from a multi-month trough further lends support to USD/JPY.
• The JPY moves little after the BoJ decision to keep short-term interest rates unchanged.

The Japanese Yen (JPY) sticks to its negative bias through the Asian session on Wednesday in the wake of weaker-than-expected domestic data and reacted little to the Bank of Japan’s (BoJ) decision to leave short-term interest rate target unchanged. Apart from this, a modest US Dollar (USD) bounce, from a multi-month low touched on Tuesday, assist the USD/JPY pair to maintain its bid tone around mid-149.00s. 

Traders, however, seem reluctant to place aggressive bets and opt to wait for the post-meeting press conference, where comments from Governor Kazuo Ueda might infuse some volatility around the JPY. The focus will then shift to the outcome of a two-day FOMC meeting, scheduled to be announced later during the US session, which will influence the USD and provide some meaningful impetus to the USD/JPY pair. 

Japanese Yen bulls remain on the defensive after the crucial BoJ decision

• The Bank of Japan (BoJ) announced on Wednesday that it maintained the short-term interest rate target in the range of 0.40%- 0.50% after concluding its two-day monetary policy review meeting. In the accompanying policy statement, the central bank noted that the uncertainty surrounding Japan’s economy, prices remains high.
• Data released earlier this Wednesday showed that Japan’s Trade Balance shifted to a surplus of ¥584.5 billion in February from a deficit of ¥415.43 billion in the same month a year earlier. The reversal was driven by a surge in exports, which increased by 11.4% YoY, and a larger-than-expected fall of 0.7% in imports. 
• Meanwhile, Japan’s Machinery Orders fell 3.5% MoM in January 2025, significantly worse than the 1.2% decline registered in the previous month. On an annual basis, Machinery Orders rose 4.4% during the reported month, slightly above December’s 4.3% increase, though the reading was below the 6.9% forecast.
• Adding to this, a Reuters Tankan poll indicated that business sentiment among Japanese manufacturers worsened for the first time in three months during March amid concerns about US tariff policies and weakness in China’s economy. In fact, the manufacturers’ index came in at -1, down from +3 in February. 
• The results of Japan’s annual spring labor negotiations, which concluded on Friday, showed that firms largely agreed to union demands for strong wage growth for the third straight year. This could boost consumer spending and contribute to rising inflation, giving the BoJ headroom to keep hiking rates.
• Investors on Wednesday will also focus on the outcome of a two-day FOMC monetary policy meeting, due to be announced later during the US session. Heading into the key central bank event risks, a modest US Dollar recovery from a multi-month low pushes the USD/JPY pair back above mid-149.00s.

USD/JPY might struggle to move beyond 150.00 amid mixed technical setup

From a technical perspective, the recent breakout above the 100-period Simple Moving Average (SMA) on the 4-hour chart was seen as a key trigger for bulls. Moreover, oscillators on the said chart are holding comfortably in positive territory and support prospects for additional gains. That said, the overnight failure ahead of the 150.00 psychological mark warrants some caution. Hence, it will be prudent to wait for a sustained strength beyond the said handle before positioning for a move towards the 150.75-150.80 region, or the 200-period SMA on the 4-hour chart, en route to the 151.00 round figure. 

On the flip side, the 149.20 area, followed by the 149.00 mark and the 148.80 region (100-period SMA on the 4-hour chart) should act as immediate support. A convincing break below the latter will suggest that the recent move-up witnessed over the past week or so has run out of steam and drag the USD/JPY pair to the 148.25-148.20 support en route to the 148.00 mark. The downward trajectory could extend further towards the 147.70 area, 147.20 region, and the 147.00 mark before spot prices eventually drop to retest a multi-month low, around the 146.55-146.50 region touched on March 11.