USD/JPY Forecast and News
USD/JPY slips as Japan’s core inflation hits two-year high
The Japanese Yen extends gains, with USD/JPY falling to near 143.00 during European hours on Friday. Japan’s core CPI rises 3.5% YoY in April, the highest in two years and above expectations. Headline inflation stands at 3.6%, the same as the previous month and the lowest since December.
Latest Japanese Yen News
USD/JPY Technical Overview
The Japanese Yen (JPY) continues to appreciate against the US Dollar (USD), extending gains after Japan’s core consumer inflation surprised to the upside. The USD/JPY pair slipped below 144.00 after posting a modest gain on Thursday to trade near 143.00 during the European session on Friday, down over 0.50% on the day.
Fundamental Overview
Japan’s National Consumer Price Index (CPI) rose 3.6% YoY in April, matching March’s figure and marking the lowest reading since December, while the core CPI, which excludes fresh food prices but includes energy, rose 3.5% YoY, up from 3.2% in March and slightly above the market forecast of 3.4%. This marks the highest core inflation print in two years, signaling persistent price pressures in the economy.
The latest rise in inflation was fueled mainly by a sharp jump in the prices of food, which surged 7.0% YoY as many companies hiked prices in April, with rice prices nearly doubling by 98.6% from a year ago.
The latest inflation data has stoked fresh speculation that the Bank of Japan (BoJ) could consider tightening policy further in the coming months. BoJ Deputy Governor Shinichi Uchida indicated earlier in the week that the central bank could continue raising interest rates if Japan’s economy rebounds from the hit of higher US tariffs, noting that inflation is likely to stay near the 2% target if conditions unfold as projected. The BoJ decided to keep its key short-term interest rate unchanged at 0.50% in its May meeting.
That said, a Reuters poll conducted between May 7 and May 13 showed that most economists expect the BoJ to keep interest rates unchanged through September. However, a slight majority favoured a rate hike before the end of the year, reflecting growing expectations of a gradual policy shift as inflation remains elevated.
The Yen also draws support from a broadly weak US Dollar, as broader sentiment remains cautious, and mounting US fiscal risks and geopolitical uncertainty curb investor appetite for the Greenback. The US Dollar index (DXY), which tracks the USD against a basket of six major currencies, failed to gain traction despite upbeat preliminary S&P Global Purchasing Managers’ Index (PMI) data for May released on Thursday and reversed from the 100.00 mark to trade around 99.30, marking a fresh weekly low.
On the trade front, Prime Minister Shigeru Ishiba has called the US tariffs, including 25% on automobiles, a "national crisis" for the world's fourth-largest economy. Japan’s top trade negotiator, Ryosei Akazawa, departed for Washington on Friday to begin a third round of talks to ease trade tensions and avert further economic fallout.
Latest JPY Analysis
Editors' picks
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EUR/USD meets daily support around the 1.1300 neighbourhood, managing to regain pace and revisit the 1.1330 region. Sentiment turned after President Trump proposed a “straight 50% tariff” on European imports, undermining the pair’s bullish momentum.
GBP/USD eases from tops, revisits the 1.3500 zone
GBP/USD benefits from broad US Dollar weakness, climbing to its highest level since February 2022 past 1.3500 at the end of the week. UK retail sales data surprised to the upside in April, lending extra wings to the quid.
USD/JPY slips as Japan’s core inflation hits two-year high
The Japanese Yen extends gains, with USD/JPY falling to near 143.00 during European hours on Friday. Japan’s core CPI rises 3.5% YoY in April, the highest in two years and above expectations. Headline inflation stands at 3.6%, the same as the previous month and the lowest since December.
Gold keeps the bullish tone near $3,350
Gold extends its weekly advance, trading around $3,350 per troy ounce on Friday. The rally in XAU/USD is driven by broad-based weakness in the Greenback, particulalry after President Trump’s threat to impose 50% tariffs on European imports.
WTI declines to below $61.00 on potential OPEC+ output hike
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $60.75 during the Asian trading hours on Friday. The WTI price edges lower amid concerns that global supply could outpace demand growth.
Majors
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Signatures
USD/JPY YEARLY FORECAST
How could USD/JPY move this year? Our experts make a USD/JPY update forecasting the possible moves of the yen-dollar pair during the whole year.
USD/JPY FORECAST 2025
In the USD/JPY 2025 Forecast , FXStreet analyst Yohay Elam indicates that USD/JPY is likely to start the year bearish due to fears of trade wars, Donald Trump's entry into the White House and expected Federal Reserve (Fed) rate cuts. However, a bullish turnaround is anticipated in the following months as Trump's trade deals stabilize global markets, weakening the safe-haven Yen. Further gains are expected in the latter half of the year, driven by a more hawkish Fed and disappointment in the Bank of Japan’s (BoJ) inaction on rate hikes.
From a technical point of view, USD/JPY remains in a long-term uptrend for 2025, supported by its position above the 50-week SMA. Key resistance levels include 156.97, 161.81, and 170.43, with the latter aligning with the 138.2% Fibonacci extension. On the downside, support lies at 147.54, 139.73, and further down at 136.72 and 127.15.
MOST INFLUENTIAL FACTORS IN 2025 FOR USD/JPY
The year will be politically marked by Trump’s return to the White House. A Republican government is seen as positive for financial markets, but Trump’s pledge to cut taxes and impose tariffs on foreign goods and services may introduce uncertainty to both the political and economic landscape.
In Japan, political uncertainty looms, as the ruling Liberal Democratic Party (LDP) lacks a parliamentary majority and may call fresh elections. An LDP victory could strengthen the Yen by ensuring stability, while opposition gains might lead to fiscal expansion and weaken the currency. If no elections occur, a modest budget would likely keep the Yen supported.
In terms of monetary policy, the Fed and BoJ are set to diverge in monetary policy. The Fed expects to deliver only two additional rate cuts in 2025, the BoJ is expected to maintain its dovish stance, avoiding rate hikes amid weak inflation and a shrinking economy, leaving the Yen vulnerable to market disappointment over policy inaction.
Influential Institutions & People for the USD/JPY
The US Dollar Japanese Yen can be seriously affected by news or the decisions taken by two main central banks:
The Federal Reserve (Fed)
The Federal Reserve (Fed) is the central bank of the United States (US) and it has two main targets: to maintain the unemployment rate at its lowest possible levels and to keep inflation around 2%. The Federal Reserve System's structure is composed of the presidentially appointed Board of Governors and the partially appointed Federal Open Market Committee (FOMC). The FOMC organizes eight scheduled meetings in a year to review economic and financial conditions. It also determines the appropriate stance of monetary policy and assesses the risks to its long-run goals of price stability and sustainable economic growth. The FOMC Minutes, which are released by the Board of Governors of the Federal Reserve weeks after the latest meeting, are a guide to the future US interest-rate policy.
Fed official website , on X and Facebook
The Bank of Japan (BOJ)
The Bank of Japan (BoJ) is the central bank of Japan. Established under the Bank of Japan
Act in 1882, it is a juridical entity and neither a government agency nor a private corporation. The BoJ sets
monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to
ensure price stability, which means an inflation target of around 2%.
Policy Board: The Policy
Board is the bank's highest decision-making body. It determines the guidelines for currency and monetary control,
sets the basic principles for carrying out the bank's operations and oversees the performance of the bank's
officers, excluding auditors and counselors.
History: The Bank of Japan was established under the
Bank of Japan Act, promulgated in June 1882, and began operating as the nation's central bank on October 10,
1882. It was reorganized in 1942 under the Bank of Japan Act of 1942, which reflected the wartime context. The
Act of 1942 was amended several times after World War II, and the establishment of the Policy Board as the bank's
highest decision-making body occurred in June 1949. In June 1997, the Act of 1942 was revised completely under
the principles of independence and transparency. The revised Act came into effect on April 1, 1998.
The official website , on X and YouTube
Jerome Powell
Jerome Powell took office as chairman of the Board of Governors of the Federal Reserve System in February 2018, for a four-year term ending in February 2022. He was sworn in on May 23, 2022, for a second term as Chairman ending May 15, 2026. Born in Washington D.C., he received a bachelor’s degree in politics from Princeton University in 1975 and earned a law degree from Georgetown University in 1979. Powell served as an assistant secretary and as undersecretary of the Treasury under President George H.W. Bush. He also worked as a lawyer and investment banker in New York City. From 1997 through 2005, Powell was a partner at The Carlyle Group.
Jerome Powell Fed's Profile and Wikipedia
Kazuo Ueda
Kazuo Ueda was born in Makinohara, Japan, on September 20, 1951. He is the 32nd and current Governor of the BoJ. He graduated from the University of Tokyo with a Bachelor of Science and Mathematics and received a PhD in economics from the Massachusetts Institute of Technology (MIT).
He is a professor emeritus at the University of Tokyo and also worked as a professor at Kyoritsu Women's University. In February 2023, former Prime Minister Fumio Kishida nominated Ueda as the governor of the BoJ. He is widely regarded as an expert on monetary policy but was considered a surprise appointment by analysts. He wasn’t even considered a dark-horse candidate, as the BoJ governor role has traditionally gone to long-serving Finance Ministry bureaucrats or central bank officials. Ueda is the first academic economist to lead the BoJ in the post-World War II era.
Ueda’s Wikipedia profile
BOJ NEWS & ANALYSIS
FED NEWS & ANALYSIS
About USD/JPY
The USD/JPY (US Dollar Japanese Yen) currency pair is one of the 'Majors', a group of the most important currency pairs in the world. The Japanese Yen, known for its low interest rate, is frequently used in carry trades, making it one of the most traded currencies worldwide. In the USD/JPY pair, the US Dollar is the base currency and the Japanese Yen serves as the counter currency.
Trading USD/JPY is also known as trading the "ninja" or the "gopher", although the latter nickname is more frequently associated with the GBP/JPY pair. USD/JPY usually has a positive correlation with other pairs like USD/CHF and USD/CAD, as all three use the US Dollar as the base currency. The value of the pair is often influenced by interest-rate differentials between the two central banks: the Federal Reserve (Fed) and the Bank of Japan (BoJ).
Related pairs
GBP/USD
The GBP/USD (or Pound Dollar) currency pair belongs to the group of 'Majors', referring to the most important and widely traded pairs in the world. The pair is also known as “the Cable”, a term originating in the mid-19th century that refers to the first transatlantic telegraph connecting Great Britain and the United States. As a closely watched and widely traded currency pair, it features the British Pound as the base currency and the US Dollar as the counter currency. For that reason, macroeconomic data from both the United States and the United Kingdom significantly impacts its price. One notable event that affected the volatility of the pair was Brexit.
EUR/USD
The EUR/USD (or Euro Dollar) currency pair belongs to the group of 'Majors', a term used t o describe the most important currency pairs in the world. This group also includes GBP/USD, USD/JPY, AUD/USD , USD/CHF, NZD/USD and USD/CAD . The popularity of the Euro Dollar pair stems from its representation of two of the world’s largest economies: the Eurozone and the United States.
The EUR/USD is one of the most widely traded currency pairs in the Forex market, where the Euro serves as the base currency and the US Dollar as the counter currency. It accounts for more than half of the total trading volume in the Forex market, making gaps almost inexistent, let alone sudden reversals caused by breakaway gaps.
The EUR/USD is usually quiet during the Asian session, as economic data influencing the pair is usually released during the European or US sessions. Activity increases as European traders begin their day, leading to heightened trading volume. This activity slows around midday during the European lunch break but picks up again when US markets come online.