Key Points
- USD/JPY trades at 142.314, holding near a 7-month yen high.
- Japan’s March headline inflation slowed to 3.6%, while core CPI met expectations at 3.2%.
- Bank of Japan is expected to hold rates at 0.5% next week amid trade concerns and export headwinds.
The Japanese yen maintained its firm tone on Friday, hovering near 7-month highs around 142.3 per dollar, following the release of March inflation data and ahead of next week’s Bank of Japan (BOJ) policy meeting. The USD/JPY pair closed at 142.314, down marginally on the day as sentiment stabilised in the aftermath of key macro data.
The latest data showed that headline inflation slowed to 3.6%, the lowest level in four months, as energy base effects kicked in. However, core inflation—which strips out volatile food prices—remained sticky at 3.2%, in line with forecasts. This offers the BOJ room to remain cautious, as inflation remains well above the 2% target.
Markets are now watching the BOJ’s decision next week, where the central bank is widely expected to keep interest rates on hold at 0.5%, following its recent pivot from negative rates. Policymakers are likely to revise growth projections downward, reflecting mounting concerns about U.S. tariffs and weaker external demand, which could pressure Japan’s export-heavy economy.
Finance Minister Shunichi Kato attempted to calm FX market fears, stating that Japan “is not manipulating the currency”, after President Trump reignited criticism of Japan’s exchange rate policies earlier this month.
Technical Analysis
The USDJPY 15-minute chart reflects sideways consolidation following a sharp intraday swing. After hitting a low of 141.611, the pair surged to 143.084, only to retreat and stabilize near the 142.30 region. This indicates indecision in the market as traders weigh risk sentiment and yield differentials.
Picture: USDJPY flattens out after wild swings between 141.60 and 143.08, as seen on the VT Markets app
The MACD histogram shows a tapering bullish momentum, now flattening near the zero line. The MACD line and signal line are converging, signalling waning momentum and a possible range-bound continuation in the near term. The price also remains closely tied to the 5, 10, and 30-period moving averages, reinforcing a neutral bias unless a breakout above 143.08 or a breakdown below 141.60 occurs.
With BOJ policy now more fluid and global trade risks on the rise, the yen is likely to remain volatile—acting as both a safe haven and a policy barometer depending on upcoming central bank communication.
