USD/JPY steadies ahead of Japan CPI and US PMIs
- Japan's March trade surplus hit ¥667B as exports rose 11.7% YoY, though imports came in hot at 10.9% on energy costs.
- Elevated crude tied to the Strait of Hormuz closure continued to pressure Yen amid Japan's reliance on imported energy.
- Thursday's Japan CPI and US PMI data will test Yen direction, with Friday's UoM inflation expectations also in focus.
USD/JPY was little changed on Wednesday, hovering close to 159.50 in a narrow session after Tuesday's push to 159.64. Price has been confined between 159.10 and 159.60 through the midweek stretch, with overlapping small-bodied candles pointing to indecision.
Japan's March trade data released late Tuesday showed a ¥667 billion surplus, coming in well below the ¥1,106 billion consensus as imports ran hot at 10.9% YoY versus a 7.1% forecast. Exports climbed 11.7% YoY, outpacing expectations, but the Strait of Hormuz closure has kept crude oil prices high, inflating Japan's energy import bill and weighing on Yen. Market hopes for a resolution to the US-Iran conflict have softened as goalposts continue to shift, though any genuine de-escalation would likely spark a risk-on rotation and broad US Dollar weakness.
On the US side, Thursday brings Initial Jobless Claims (consensus 212K, prior 207K) alongside preliminary April S&P Global Purchasing Managers Index (PMI) figures, with Services forecast to return to the 50 threshold after a brief dip into contraction and Manufacturing seen near 52.5. Japan's National Consumer Price Index (CPI) also lands Thursday, with the core measure excluding fresh food expected at 1.8% YoY versus 1.6% prior, a hotter print likely to fuel renewed BoJ hike speculation. Friday's University of Michigan (UoM) sentiment and inflation expectations round out the week, with one-year inflation expectations forecast steady at 4.8% amid the supply-shock impulse from elevated crude.
USD/JPY 15-minute chart
Technical Analysis
In the fifteen-minute chart, USD/JPY trades at 159.48. The pair is consolidating in a tight range around the intraday area, with no nearby moving averages or structural levels to provide clear directional cues. The Stochastic RSI has retreated toward lower readings near 30, hinting that bearish momentum has cooled after earlier overbought conditions, but price action remains broadly range-bound for now.
With no major exponential moving averages or Fibonacci levels in play on this timeframe, short-term traders are likely to focus on price behavior around the 159 handle and the recent intraday highs and lows to gauge a breakout or continuation. A sustained move away from the current consolidation band, accompanied by a turn higher or lower in the Stochastic RSI from its subdued zone, would help define the next directional impulse in USD/JPY on the very short-term horizon.
In the daily chart, USD/JPY trades at 159.48, holding a constructive bullish bias as spot remains above both the 50-period Exponential Moving Average (EMA) at 158.25 and the 200-period EMA at 154.93. The configuration of price above these key trend EMAs suggests that the broader uptrend remains intact, although the Stochastic RSI near 31.9 hints that upside momentum has cooled after the recent advance, leaving the pair vulnerable to bouts of consolidation or shallow pullbacks within the prevailing bullish structure.
On the downside, initial support is seen at the 50-day EMA around 158.25, with a deeper cushion at the 200-day EMA near 154.93 should sellers gain traction. As long as USD/JPY holds above the 50-day EMA on closing bases, dips are likely to be treated as corrective within the broader uptrend, while a sustained break beneath this level would be needed to signal a more meaningful deterioration in the bullish outlook.
(The technical analysis of this story was written with the help of an AI tool.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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