Japanese Yen sticks to strong Tokyo CPI-inspired gains, lacks bullish conviction

• The Japanese Yen attracts some buyers following the release of a strong Tokyo CPI print.
• The BoJ’s hawkish stance and the risk-off mood further underpin the safe-haven JPY.
• The US PCE Price Index due later this Friday should provide fresh impetus to USD/JPY.

The Japanese Yen (JPY) attracts some buyers touching a nearly four-week low against its American counterpart during the Asian session on Friday, though it lacks follow-through. Strong consumer inflation data from Tokyo (Japan’s capital city) keeps the door open for more interest rate hikes by the Bank of Japan (BoJ). Moreover, the BoJ Summary of Opinions indicated that a rate hike is still on the table if the economy and prices move in line with the forecast, which, in turn, offers some support to the JPY. 

Meanwhile, the uncertainty over US President Donald Trump’s impending reciprocal tariffs and their impact on the global economy continues to weigh on investors’ sentiment. This turns out to be another factor underpinning demand for the safe-haven JPY. Apart from this, subdued US Dollar (USD) price action keeps the USD/JPY pair depressed below the 151.00 mark. However, concerns that Trump’s trade tariffs could impact key Japanese exports hold back the JPY bulls from placing aggressive bets. 

The downside for the USD also seems limited as investors opt to wait for the US Personal Consumption Expenditure (PCE) Price Index, due for release later during the North American session, for cues about the Federal Reserve’s (Fed) rate-cut path. This will play a key role in influencing the USD and provide some meaningful impetus to the USD/JPY pair. Nevertheless, spot prices remain on track to register gains for the third straight week, though the divergent BoJ-Fed expectations warrant caution for bulls. 

Japanese Yen attracts some safe-haven flows amid rising BoJ rate hike bets

• US President Donald Trump on Wednesday unveiled a 25% tariff on imported cars and light trucks to take effect on April 3. This fuels concerns that the levies would have a far-reaching impact on Japan’s auto industry, which accounts for roughly 3% of gross domestic product.
• Data released earlier this Friday showed that the headline Consumer Price Index (CPI) in Tokyo rose 2.9% in March from 2.8% previous. Moreover, Tokyo Core CPI, which excludes volatile fresh food prices, climbed to 2.4% during the reported month from 2.2% in February. 
• Adding to this, a core reading that excludes both volatile fresh food and energy prices grew from 1.9% in the prior month to 2.2% in March. This is now above the Bank of Japan’s annual 2% target and backs the case for further interest rate hikes by the Japanese central bank. 
• BoJ Summary of Opinions from the March meeting revealed a consensus to continue raising rates if the economy and prices move in line with the forecast. The board, however, viewed that the policy must be kept steady for the time being as the downside risks to the economy have heightened due to the US tariff policy.
• The global risk sentiment took a hit in reaction to Trump’s auto tariffs and worries that reciprocal tariffs next week will dent US growth. This overshadowed an upward revision of the US Q4 GDP, which showed that the economy grew at a 2.4% annualized pace vs 2.3% in the previous estimate.
• Richmond President Thomas Barkin warned on Thursday that the economic uncertainty driven by the Trump administration’s trade policy could dampen consumer and business spending, and will force the central bank into a wait-and-see approach rather than the proactive stance most investors are hoping for. 
• Boston Fed President Susan Collins noted that the US central bank’s challenge at this point is to choose between maintaining a tight policy stance or trying to run ahead of data that might be souring in the future. Given the outlook, Collins expects the Fed to hold rates steady for longer.
• Investors now look forward to the release of the US Personal Consumption Expenditure (PCE) Price Index, which could offer fresh cues about the Fed’s future interest rate-cut path. This, in turn, will drive the US Dollar and provide some meaningful impetus to the USD/JPY pair. 

USD/JPY bulls have the upper hand while above 150.00 psychological mark

From a technical perspective, the intraday pullback from the vicinity of the monthly peak warrants caution before placing fresh bullish bets around the USD/JPY pair and positioning for further gains. Meanwhile, oscillators on the daily chart have just started gaining positive traction and support prospects for the emergence of some dip-buying near the 150.00 psychological mark. Some follow-through selling below the 149.85-149.80 region, however, would negate the positive bias and drag spot prices to the 149.25 support zone en route to the 149.00 round figure and the next relevant support near the 148.65 region.

On the flip side, a move beyond the monthly peak, around the 151.30 area, might confront some resistance near a technically significant 200-day Simple Moving Average (SMA), currently pegged near the 151.65 region. A sustained strength beyond the latter will be seen as a fresh trigger for bulls and allow the USD/JPY pair to reclaim the 152.00 mark. The positive momentum could extend further to the 152.45-152.50 region before spot prices aim to challenge the 100-day SMA, around the 153.00 round figure.