The Japanese Yen (JPY) has come under increased selling pressure following a disappointing set of domestic economic data and statements made by Bank of Japan (BoJ) Governor Kazuo Ueda. His recent remarks during a post-monetary policy meeting press conference about ongoing economic uncertainties in Japan have contributed to a significant dip in the currency's value.

The JPY's decline was further exacerbated by a minor recovery in the US Dollar (USD) from a multi-month low, propelling the USD/JPY exchange rate toward the crucial psychological barrier of 150.00—a level not seen in two weeks.

In his statements, Governor Ueda acknowledged the need for the BoJ to maintain economic stimulus until its inflation target is sustainably achieved. However, his words failed to instill confidence in the Yen, leading to increased selling activity among traders. Earlier this morning, it was revealed that Japan's Trade Balance has shifted to a surplus of ¥584.5 billion for February, a notable turnaround from a deficit of ¥415.4 billion in February of the previous year, largely due to an 11.4% year-on-year surge in exports coupled with a 0.7% decline in imports.

Conversely, Japanese Machinery Orders experienced a troubling 3.5% month-on-month fall in January 2025, representing a stark contrast to the previous month's decline of just 1.2%. Despite an annual gain of 4.4% in Machinery Orders slightly exceeding December's 4.3% rise, this figure was below market expectations of 6.9%.

Moreover, a recently conducted Reuters Tankan poll revealed that business sentiment among Japanese manufacturers worsened for the first time in three months, reflecting growing concerns over U.S. tariff policies and economic fragility in China. The manufacturers’ index dropped to -1, down from +3 in February.

Interestingly, the results of Japan's annual spring labor negotiations—concluding last week—showed a commitment from firms to meet union demands for robust wage increases for the third consecutive year. This could potentially enhance consumer spending and contribute to inflation, providing the BoJ with leeway for future interest rate hikes.

As the US Federal Reserve (Fed) prepares to announce its monetary policy decisions later today, the market is bracing itself for potential rate cuts in the coming months. This anticipation, combined with the narrowing interest rate gap between the USD and JPY, has resulted in increased caution among investors regarding the USD/JPY pair.

Technical Insights:

Traders are keenly observing the USD/JPY technical landscape. Following a breakout above the 100-period Simple Moving Average (SMA) on the 4-hour chart, bullish sentiment has been reignited. Oscillators remain in positive territory, suggesting potential for further advances. However, the recent failure to maintain momentum above the 150.00 barrier raises concerns about sustainability.

The immediate support levels have been identified at 149.20, with further support at 149.00 and 148.80—the latter represented by the 100-period SMA on the 4-hour chart. A decisive break below these levels may indicate a loss of upward momentum, dragging the pair towards lower support levels around 148.25 and potentially challenging the multi-month low near the 146.50 range observed on March 11.

As we navigate these turbulent financial waters, it remains to be seen whether the events of today will further influence currency movements or allow for a rebound in the Japanese Yen. Investors worldwide are keeping a watchful eye on developments as the global economic landscape continues to shift.