Japanese Yen Selling Bias Persists After BoJ Governor Ueda’s Press Conference

Market Review
Date: May 1, 2025
Reported By: Haresh Menghani

The Japanese Yen (JPY) continues its downward trajectory, recording a third consecutive day of losses following the Bank of Japan’s (BoJ) recent policy announcement. As investors digest the implications of BoJ Governor Kazuo Ueda’s press conference, the selling pressure on the Yen shows no signs of abating.

BoJ Policy Decision and Economic Forecasts
In its latest meeting, the BoJ opted to maintain its policy interest rate at a steady 0.5%, a decision widely anticipated by market participants. However, the central bank adjusted its forecasts, lowering the median Gross Domestic Product (GDP) and core Consumer Price Index (CPI) projections for fiscal year 2026. Specifically, the BoJ decreased its median core CPI forecast from 2.0% to 1.7%, signalling concerns over inflation dynamics.

During the press conference, Ueda emphasized that while Japan is on track to achieve its economic goals, the timeline for reaching the inflation target of 2% has been extended. This statement tempered market expectations for an imminent interest rate hike, which further pressured the JPY.

Market Reactions to Ueda’s Remarks
The Yen’s depreciation was exacerbated by Ueda’s comments, which acknowledged that economic and price expectations could shift substantially depending on how other countries handle US tariffs. The Governor’s cautious outlook continues to plague the Yen, contributing to its dropping to a three-week low against the US Dollar.

Compounding the Yen’s struggles, positive remarks from US President Donald Trump regarding the potential easing of tensions in the US-China trade relations have bolstered a generally positive market sentiment. This has further undermined the JPY, which is typically viewed as a safe-haven asset during periods of uncertainty.

US Economic Indicators and Their Implications
Adding a layer of complexity to the situation, recent US economic indicators reveal a mixed picture. The Automatic Data Processing (ADP) reported a notable slowdown in private-sector employment growth, with an increase of only 62,000 jobs in April, a stark contrast to March’s revised gain of 147,000. Additionally, the US economy contracted at an annualized rate of 0.3% in the first quarter of 2025, following a robust growth rate of 2.4% in the previous quarter.

The US Personal Consumption Expenditures (PCE) Price Index, a major inflation gauge, also showed a decline to 2.3% year-on-year in March from 2.5% in February. This decline in inflation may raise concerns about a potential US recession and stir speculation regarding future interest rate cuts by the Federal Reserve.

Technical Analysis of USD/JPY
From a technical standpoint, the USD/JPY couple has broken through the 100-period Simple Moving Average (SMA) on the 4-hour chart, which served as a critical threshold for bullish momentum. The pair is currently trading in the mid-144.00s range, and analysts suggest that a move beyond the 143.55-143.60 resistance level could pave the way for further gains, potentially targeting the psychological barrier of 145.00. On the downside, immediate support is noted in the 142.65-142.60 range, and any significant breakdown beneath this level might lead the USD/JPY pair to retreat closer to the 142.00 mark.

Conclusion
The Japanese Yen remains under pressure as the BoJ maintains a dovish stance amid economic uncertainties. With US economic indicators showing signs of slowing growth and potential rate cuts looming, the Yen’s path remains challenging. Investors will continue to monitor both domestic and international developments closely to gauge the impact on currency markets in the days ahead.

As market sentiment evolves, traders should remain vigilant and informed to navigate the shifting financial landscape effectively.