Insights 
VT 
Key Points
- USDJPY fell from a session high of 146.284 to a low of 143.441, with prices consolidating around 143.98 at the time of writing.
- Tokyo’s core CPI rose faster than expected, reviving rate hike speculation and driving renewed yen buying across Asia sessions.
The Japanese yen extended its rally on Friday, breaking firmly below the 144.00 threshold against the U.S. dollar after stronger-than-forecast inflation data from Tokyo rekindled speculation that the Bank of Japan could tighten policy sooner than markets had anticipated.
The Tokyo core CPI, a leading indicator of national inflation, rose unexpectedly, prompting traders to revise their rate expectations. Market consensus now leans towards a 25 basis point hike in July, with overnight index swaps pricing in higher odds of incremental tightening from the BOJ for the remainder of the year.
Policy Commentary and Macro Pressure
In a statement on Friday, BOJ Governor Kazuo Ueda acknowledged that the central bank’s recent downgrade of its inflation forecast was based on external factors, including ongoing trade uncertainty, fading cost-push pressure, and a dramatic decline in global oil prices. However, Ueda clarified that the revision would not deter the BOJ’s pursuit of its 2% inflation target, implying that upcoming decisions would still focus on domestic price dynamics and wage growth.
The BOJ is one of the few major central banks still exiting ultra-easy monetary policy, making the yen highly sensitive to incremental inflation upside surprises. Analysts now anticipate a cautious but deliberate shift toward normalisation in coming quarters, particularly if domestic demand stabilises.
Global Crosswinds and Tariff Reinstatement
The yen also benefitted from renewed safe-haven flows after a U.S. appeals court overturned a lower court ruling and reinstated President Trump’s reciprocal tariff programme. This legal reversal reignited concerns over trade frictions and disrupted the previous session’s risk rally, sending the dollar lower against traditional havens like the yen and Swiss franc.
Investors are now digesting the broader macro implications of tariff uncertainty, not just on growth, but on FX policy stances in Asia. Japan, with its large trade surplus and exposure to global supply chains, could once again find itself in the spotlight if U.S. protectionism accelerates.
Technical Analysis
USDJPY spiked to a session high of 146.284 early on 29 May before facing steady downward pressure through the rest of the day and into 30 May. The pair has since been caught in a sustained downtrend, with price action consistently below the 30-period moving average, confirming bearish dominance. Attempts at intraday recoveries have so far been capped by the 10- and 30-MA crossovers, reinforcing the prevailing resistance.
Picture: USDJPY tumbles from 146.28 peak to 143.44 support; bearish bias holds as momentum stalls beneath moving averages, as seen on the VT Markets app
The MACD crossed below the signal line during the early stages of the selloff and has remained in bearish territory, although the histogram is showing early signs of stabilisation. A key support formed at 143.441, with prices attempting to base just above that level. If the pair breaks below, further downside toward 143.00 could be expected, while a move back above 144.20 would be needed to shift momentum.
If USDJPY fails to reclaim the 144.50 zone early in the next session, we may see a retest of the 143.00–143.40 support band. However, much depends on U.S. inflation and employment data due next week — any upside surprise in those metrics could renew Fed rate speculation and limit the yen’s ascent.
For now, yen bulls are in control, supported by both domestic fundamentals and global caution.
