Japanese Yen Extends Decline Following BoJ Governor Ueda’s Remarks

The Japanese Yen (JPY) continues to weaken following comments from Bank of Japan (BoJ) Governor Kazuo Ueda during the post-meeting press conference, dropping to a one-month low against the US Dollar (USD). The absence of clear signals regarding a potential rate hike in early 2025 weighs on the Yen. Additionally, expectations of a slower pace of rate cuts by the Federal Reserve (Fed) support higher US Treasury yields, further diminishing the appeal of the lower-yielding JPY.

The Fed’s hawkish outlook for 2025 helps the USD sustain its strong rally to a two-year high, providing additional upward momentum for the USD/JPY pair. However, the risk-off sentiment, fueled by geopolitical tensions and trade war concerns, may offer some relief to the safe-haven JPY.

Despite these factors, the overall market sentiment remains bearish for the Yen, suggesting the USD/JPY pair is likely to trend higher. Traders now await US macroeconomic data for fresh trading opportunities during the North American session.

Japanese Yen Selling Bias Persists Following BoJ Governor Ueda’s Comments

• The Bank of Japan (BoJ) maintained its short-term rate target within the 0.15%-0.25% range after concluding its two-day monetary policy review on Thursday.
• The BoJ anticipates a rise in the Consumer Price Index (CPI) by 2025, driven by a virtuous cycle of higher wages, increased private consumption, and the fading effects of recent government subsidies.
• BoJ Governor Kazuo Ueda reaffirmed the central bank’s readiness to adjust its degree of monetary easing if the economic outlook aligns with projections, while acknowledging uncertainties surrounding growth and inflation.
• Hours earlier, the Federal Reserve reduced its benchmark policy rate by 25 basis points to a range of 4.25%-4.50%, marking its third rate cut since September.
• The Fed’s updated dot plot now signals two quarter-point rate cuts in 2025, down from the four cuts projected in September.
• During his press conference, Fed Chair Jerome Powell emphasized that inflation remains slightly above the central bank’s 2% target.
• Following the Fed’s announcement, the yield on the benchmark 10-year US Treasury bond reached its highest closing level since May 31, while the US Dollar surged to a two-year high amid the Fed’s hawkish stance.
• Elevated US bond yields, combined with expectations of unchanged BoJ rates, continue to pressure the lower-yielding Japanese Yen.
• Market focus now shifts to US macroeconomic data, including the final Q3 GDP figures and Weekly Initial Jobless Claims, set for release during the early North American session.
• Attention will then turn to the US Personal Consumption Expenditures (PCE) Price Index, a key measure of inflation, due on Friday.

USD/JPY Eyes Multi-Month High Near 156.75

Building on the recent rebound from the 100-day Simple Moving Average (SMA) and the monthly low, sustained momentum above the 155.00 psychological level could serve as a key catalyst for bullish traders. Oscillators on the daily chart are gaining positive traction while remaining below overbought territory, supporting the case for further upside. A clear break above the 155.40-155.45 resistance zone would pave the way for the USD/JPY pair to reclaim the 156.00 level. Beyond this, the rally could extend toward the multi-month high of 156.75, last seen in November.

On the downside, the 154.25 level now acts as immediate support, followed by the 154.00 mark. A break below these levels could expose the weekly low near 153.15. Further selling pressure might drive the pair toward the next key support in the 152.55-152.50 region. However, any decline toward the 20-day SMA around 152.20 may attract fresh buying interest. Failure to hold above this pivotal support could shift the near-term outlook to bearish, potentially dragging prices down toward the 151.00 psychological level.