- USD/JPY steadies near 146.00 as diverging economic data drives sentiment.
- US inflation concerns support Fed hawkishness and boost USD demand.
- Safe-haven demand for the Yen fades amid Japan's growth struggles.
USD/JPY is moving higher on Friday as traders respond to weak growth figures from Japan and rising inflation expectations in the United States.
At the time of writing, the pair is up 0.22% around 146.00, with focus now shifting to upcoming comments from US Federal Reserve (Fed) officials on Monday, which could offer clues on interest rate policy.
Broader risk sentiment has turned cautiously positive, with equities stabilizing and Treasury yields holding firm, lending near-term support to the US Dollar (USD) against the Japanese Yen (JPY).
Japan’s GDP contraction highlights fragility in economic recovery, pressures BoJ policy path
The initial driver of the USD/JPY move was Japan’s weaker-than-expected Gross Domestic Product (GDP) report for the first quarter. The economy contracted by 0.2% QoQ, compared to forecasts of a 0.1% decline, and dropped 0.7% YoY. This was Japan’s first economic contraction in a year, raising concerns about the durability of its recovery.
Consumer spending stalled, exports declined, and a sharp rise in imports widened the trade gap, adding to the country’s economic headwinds.
The data suggests Japan’s economy remains vulnerable and that the Bank of Japan (BoJ) may be forced to delay any further interest rate hikes.
BoJ policymaker Toyoaki Nakamura added weight to that view on Friday, telling Reuters that “Japan’s economy is facing mounting downward pressure” and warning that moving too quickly on rates could hurt both consumer and business activity.
US consumer sentiment slumps but inflation fears surge, complicating Fed outlook
At the same time, markets were shaken by the latest preliminary University of Michigan consumer data from the United States. While sentiment fell sharply to 50.8, its second-lowest reading ever, short-term inflation expectations unexpectedly jumped.
Consumers now expect prices to rise 7.3% over the next year, up from 6.5% in April, and the highest reading since 1981. This matters because it signals that households are bracing for continued cost-of-living pressures, which could force the Federal Reserve to keep interest rates elevated for longer, even if economic confidence is fading.
While the Yen often gains during global risk aversion, the weak GDP data undermines its longer-term strength. If Japan’s economic outlook deteriorates further and inflation recedes, markets may revert to selling the Yen, especially if the Fed maintains its policy stance.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.36% | 0.26% | 0.15% | 0.22% | 0.10% | 0.03% | 0.39% | |
| EUR | -0.36% | -0.09% | -0.20% | -0.14% | -0.25% | -0.33% | 0.03% | |
| GBP | -0.26% | 0.09% | -0.12% | -0.05% | -0.16% | -0.23% | 0.13% | |
| JPY | -0.15% | 0.20% | 0.12% | 0.06% | -0.07% | -0.16% | 0.22% | |
| CAD | -0.22% | 0.14% | 0.05% | -0.06% | -0.14% | -0.18% | 0.20% | |
| AUD | -0.10% | 0.25% | 0.16% | 0.07% | 0.14% | -0.07% | 0.29% | |
| NZD | -0.03% | 0.33% | 0.23% | 0.16% | 0.18% | 0.07% | 0.36% | |
| CHF | -0.39% | -0.03% | -0.13% | -0.22% | -0.20% | -0.29% | -0.36% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD moves in a consolidative theme near 1.1570
Following multi-year highs north of the 1.1600 barrier, EUR/USD now looks range bound around the 1.1570 zone as the NA session draws to a close on Thursday. The strong upside in the pair came on the back of broad-based decline in the US Dollar, which was particularly sponsored by lower US inflation data, further cooling of the labour market, and prospects of further rate cuts by the Fed.
GBP/USD looks bullish just below 1.3600
GBP/USD maintains its constructive stance in place in the latter part of Thursday’s session, hovering just below 1.3600 the figure on the back of heightened losses in the Greenback. In the meantime, investors continue to pencil in two potential rate cuts by the Fed for the remainder of the year.
Gold consolidates its gains near $3,380
Gold maintains its weekly rebound well in place, now trading in the sub-$3,400 region per troy ounce in response to the persistent selling bias in the US Dollar, declining US yields across the curve and growing geopolitical tensions.
Cardano Price Forecast: Whales acquire 310 million ADA amid potential triangle breakout
Cardano (ADA) shows weakness as it reverses from an overhead trendline of a triangle pattern. The altcoin edges lower by over 1% at press time on Thursday, fueling a steeper correction in its Open Interest. Amid weakness, Cardano whales have acquired 310 million ADA tokens so far this month, projecting increased confidence as the triangle pattern nears resolution.
US tariffs here to stay, trade deals ‘largely symbolic’
Despite legal challenges to IEEPA tariffs, US trade policy remains firm. Tariffs on steel and aluminium have doubled, and new sectoral tariffs are expected. Trade deals may emerge, but most will be symbolic. Effective tariff rates will stay high throughout 2025.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.