Japanese Yen selling bias remains unabated amid trade deal talks; USD/JPY approaches 145.00 mark

• The Japanese Yen drifts lower for the second straight day amid US trade deal optimism.
• Bets that the BoJ will hike rates in 2025, and economic uncertainty could limit JPY losses.
• The Fed’s hawkish pause pushes the USD and USD/JPY higher ahead of Trump's presser.

The Japanese Yen (JPY) continues losing ground through the first half of the European session on Thursday, which, along with some follow-through US Dollar (USD) buying, lifts the USD/JPY pair further beyond mid-144.00s. US President Donald Trump's comments on a big trade deal announcement later today add to the optimism over the start of US-China trade talks later this week and boost investors' confidence. This, in turn, is seen undermining traditional safe-haven assets and turning out to be a key factor behind the JPY's relative underperformance against its American counterpart for the second straight day.

The USD, on the other hand, continues to draw support from the Federal Reserve's (Fed) hawkish pause on Wednesday. That said, the heightened economic uncertainty in the wake of Trump's rapidly shifting stance on trade policies might hold back the USD bulls from placing aggressive bets. Furthermore, minutes from the Bank of Japan's (BoJ) March meeting indicated that the central bank remains ready to tighten further if economic and price outlooks hold. This should help limit deeper JPY losses and cap the upside for the USD/JPY pair as traders keenly await Trump's press conference at 14:00 GMT for a fresh impetus.

Japanese Yen bears retain intraday control as US trade deal optimism undermines safe-haven assets

• Minutes from the Bank of Japan's (BoJ) monetary policy meeting held on March 18-19 revealed that the central bank remains ready to hike interest rates further if inflation trends hold. Policymakers, however, stressed caution due to global volatility on the back of heightened economic uncertainty stemming from US tariff policies.
• Meanwhile, BoJ Governor Kazuo Ueda said that he is mindful of the impact of the rising food prices on underlying inflation. Furthermore, expectations that sustained wage hikes will boost consumer spending and inflation in Japan suggest that the BoJ may not abandon its rate-hike plans altogether and tighten further in 2025.
• US President Donald Trump tempered hopes for a quick resolution to the US-China trade war by saying that he was not open to lowering the 145% tariffs imposed on China. Trump added that he is in no real hurry to sign any deals, though he said that he will announce a major deal with a big, highly respected country later today.
• On the geopolitical front, Russia and Ukraine engaged in a wave of strikes on Wednesday, ahead of Russian President Vladimir Putin's unilateral three-day ceasefire, which came into force earlier this Thursday. Furthermore, the Israeli military said that it had fully disabled Yemen's main airport in the capital, Sanaa, which is controlled by the Houthis.
• The US Dollar bulls struggle to capitalize on the previous day's move higher despite the Federal Reserve's signal that it is not leaning toward cutting rates anytime soon. In fact, Fed Chair Jerome Powell said that there is a great deal of uncertainty over US trade tariffs and that the right thing to do now is to wait for further clarity.
• Traders now look forward to the US Weekly Initial Jobless Claims, due for release later during the North American session. The focus, however, is Trump's press conference at 14 GMT in the Oval Office, which will play a key role in influencing the broader risk sentiment and drive demand for the safe-haven JPY.

USD/JPY seems poised to reclaim 145.00; 200-period SMA on 4-hour chart holds the key for bulls

From a technical perspective, the intraday failure near the 144.00 mark favors the USD/JPY pair amid still negative oscillators on the daily chart and against the backdrop of last week's rejection near the 200-period Simple Moving Average (SMA) on the 4-hour chart. Some follow-through selling below the 143.40-143.35 immediate support will reaffirm the negative outlook and drag spot prices below the 143.00 mark, back towards the 142.35 area, or the weekly low. This is followed by the 142.00 round figure, which, if broken, could make the currency pair vulnerable to weakening further.

On the flip side, the 144.00 mark might continue to act as an immediate hurdle ahead of the 144.25-144.30 supply zone. A sustained strength beyond the latter might trigger a short-covering rally and allow the USD/JPY pair to reclaim the 145.00 psychological mark. The momentum could extend further towards the 200-period SMA on the 4-hour chart, currently pegged near the 145.25 region, en route to last week's swing high, around the 146.00 neighborhood.