The Japanese Yen (JPY) has been on a downward trajectory for three consecutive days, driven by a prevailing positive risk sentiment in the market.

The USD/JPY pair has recently surged to a two-week high around the 149.85 mark, propelled by a modest rebound of the US Dollar (USD) from its recent multi-month lows. This ongoing selling pressure on the Yen is a result of mounting optimism surrounding economic measures from China and tentative hopes for peace talks between the U.S. and Russia regarding Ukraine.

Market participants seem to be pricing in expectations for continued interest rate hikes by the Bank of Japan (BoJ), aided by encouraging results from Japan's annual spring wage negotiations (Shunto). These negotiations have largely met union demands for higher wages, signaling a possible increase in consumer spending and inflationary pressures, thus providing the BoJ with the leeway to maintain its rate increases. However, traders are also cautiously anticipating a dovish stance from the Federal Reserve (Fed), with speculation of potential rate cuts later this year if inflation eases and the labor market cools.

Investors are closely monitoring the upcoming policy decisions from both the BoJ and the Fed, with expectations that these outcomes will heavily influence the USD/JPY pair's direction. Notably, both central banks are set to release their decisions tomorrow, which could either prolong the Yen's decline or spark a turnaround.

In the meantime, Japan’s Finance Minister, Katsunobu Kato, addressed the bond market dynamics at a press conference, assertively stating that market forces should steer yield movements, while the government would respond appropriately to fluctuations.

Analyzing the technical side of the USD/JPY pair, a pivotal break above the 100-period Simple Moving Average (SMA) on the 4-hour chart and strength above the 149.00 mark indicate a bullish sentiment from traders. If the pair manages to clear the psychological barrier at 150.00, we might witness a surge toward the 150.75-150.80 region, a major resistance level reflecting the 200-period SMA.

Conversely, if the prices dip below the immediate support levels at 149.20 and 149.00, it may signal a loss of bullish momentum, potentially dragging the USD/JPY down toward the 148.25-148.00 range.

As traders anticipate key economic data from the U.S., including Building Permits and Housing Starts, they remain laser-focused on how the BoJ and Fed's decisions tomorrow will shape market trajectories. The potential for the USD/JPY pair to navigate upward toward the 150.00 mark adds an element of intrigue for market watchers.

In summary, the Yen's ongoing weakness, coupled with optimistic economic indicators and the looming decisions of the BoJ and Fed, sets the stage for a potentially explosive trading day ahead. Keep your eyes peeled, as this situation evolves—it could have significant implications for currency traders and investors globally!