The Japanese Yen (JPY) continued to trade under pressure for the second consecutive session on Wednesday, slipping toward a two-week low against the US Dollar (USD) amid improved global risk sentiment and broad USD strength. The USD/JPY pair was seen hovering near the 145.00 psychological threshold during Asian hours, supported by optimism surrounding US-China trade negotiations and sustained buying interest in the greenback.
Recent comments from US Commerce Secretary Howard Lutnick and China’s Vice Commerce Minister Li Chenggang highlighted progress in bilateral talks, with both sides reaching a framework agreement aimed at easing trade tensions. The breakthrough, seen as a positive signal for global trade stability, has buoyed equity markets and undermined demand for traditional safe havens like the Yen.
Still, the JPY’s downside appears limited, as expectations build that the Bank of Japan (BoJ) will raise interest rates again this year. In contrast, the Federal Reserve is widely expected to begin cutting rates in 2025. This diverging policy outlook continues to lend underlying support to the Yen, curbing deeper losses.
Investor caution also emerged ahead of the US Consumer Price Index (CPI) release later on Wednesday, with markets keenly awaiting inflation figures that could influence the Fed’s rate trajectory. US Treasury yields remain steady, with 2-year and 10-year bonds yielding 4.01% and 4.46%, respectively.
Meanwhile, a US federal appeals court allowed President Donald Trump’s tariffs to remain in effect temporarily, further adding complexity to the trade policy outlook. The court has yet to decide on the legality of invoking emergency economic powers for imposing the tariffs.
Domestically, the Japanese economy showed resilience, with data last week revealing a smaller-than-expected contraction in Q1. Combined with emerging signs of broadening inflation, this has reinforced expectations for continued BoJ policy normalization—another factor tempering Yen weakness.
Technical Outlook: USD/JPY Bulls Eye Break Above 145.30
From a technical standpoint, the USD/JPY pair maintains a bullish bias, trading above the 100-period Simple Moving Average (SMA) on the daily chart. Positive momentum indicators on both daily and hourly timeframes further support this view. However, repeated failures to sustain moves above the 145.00 level suggest that a confirmed break above 145.30—a recent two-week high—may be needed to reignite upward momentum.
A decisive move above 145.30 could open the door to additional gains toward intermediate resistance at 145.60–145.65, with the next significant hurdle at 146.00. Beyond that, bulls may aim for the 146.25–146.30 zone, the May 29 swing high.
On the downside, initial support lies at the 200-period SMA on the 4-hour chart, around 144.30, followed by the 144.00 mark. A break below this level would negate the current bullish setup and could trigger a pullback toward the 143.60–143.50 region, with further declines potentially targeting sub-143.00 levels.
As markets await the latest US CPI data, traders are likely to remain cautious, with the outcome expected to shape near-term sentiment and influence broader USD/JPY direction.
