USD/JPY Price Forecast: Yen underperforms amid BoJ rate outlook uncertainty

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USD/JPY Price Forecast: Yen underperforms amid BoJ rate outlook uncertainty

The Japanese Yen faces selling pressure against its peers despite risk-on sentiment and hopes of a BoJ interest rate hike on Tuesday.
The US-Iran deal finalization has lifted market sentiment.
The uncertainty over BoJ’s monetary policy outlook has dampened the Yen’s appeal.

The Japanese Yen (JPY) trades lower against its major currency peers during the European trading session on Monday, while the USD/JPY pair is marginally lower at around 160.15 after recovering its early losses.

Japanese Yen Price Today

The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the weakest against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.34%	-0.15%	-0.06%	-0.13%	-0.34%	-0.20%	-0.47%
EUR	0.34%		0.18%	0.30%	0.22%	-0.01%	0.15%	-0.15%
GBP	0.15%	-0.18%		0.11%	0.04%	-0.21%	-0.01%	-0.33%
JPY	0.06%	-0.30%	-0.11%		-0.06%	-0.29%	-0.16%	-0.44%
CAD	0.13%	-0.22%	-0.04%	0.06%		-0.21%	-0.09%	-0.37%
AUD	0.34%	0.01%	0.21%	0.29%	0.21%		0.17%	-0.12%
NZD	0.20%	-0.15%	0.01%	0.16%	0.09%	-0.17%		-0.31%
CHF	0.47%	0.15%	0.33%	0.44%	0.37%	0.12%	0.31%

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 Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).

The Asia-Pacific currency underperforms even as market sentiment remains risk-on due to the finalization of the peace framework between the United States (US) and Iran, which will be signed on Friday in Switzerland.

At press time, S&P 500 futures are up almost 1.3%, reflecting strong demand for riskier assets.

On the domestic front, firm expectations that the Bank of Japan (BoJ) will raise interest rates by 25 basis points (bps) to 1% on Tuesday are also failing to lift the Japanese Yen.

It seems that uncertainty surrounding the BoJ’s monetary policy guidance by Deputy Governor Shinichi Uchida after Tuesday’s policy announcement, who will brief the media on behalf of recently hospitalized Governor Kazuo Ueda, is limiting the Yen’s upside.

The BoJ is unlikely to support further tightening of monetary conditions in the remaining year, as higher energy prices due to Middle East tensions have exposed greater risks to Japan’s fiscal policy.

Also, the Japanese government’s intentions to loosen its fiscal policy in an attempt to provide relief to households from the burden of high inflation are also weighing on the Japanese Yen. Analysts at Nomura Securities said in a note, “The BoJ doesn't want to go too much ahead of the government policy stance, only to become a scapegoat."

USD/JPY technical analysis

USD/JPY trades marginally lower at around 160.14 at press time, keeping a bullish near-term bias as it holds above the 20-day exponential moving average (EMA) at 159.69. The pair remains underpinned by this rising EMA, while the Relative Strength Index (RSI) on the daily chart around 58 suggests firm but not overstretched upside momentum, hinting that buyers retain control for now.

On the downside, initial support is aligned with the 20-day EMA near 159.70, where a break would signal fading upside pressure and open the door to a deeper corrective pullback towards the May 20 low at 158.60. On the upside, the April 30 high at 160.73 will remain a key barrier for US Dollar bulls.

(The technical analysis of this story was written with the help of an AI tool.)

Economic Indicator

BoJ Interest Rate Decision

The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.