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Japanese Yen Struggles Amid Mild USD Strength, Downside Looks Capped

Mellissa · 29 Apr3.5K Views

The Japanese Yen (JPY) continues to add to its intraday losses, with a modest rise in the US Dollar (USD) pushing the USD/JPY pair back above the mid-142.00s during the Asian session on Tuesday. Easing trade tensions between the US and China, the world’s two largest economies, have fostered a more positive risk sentiment, reducing the demand for traditional safe-haven assets like the JPY. However, traders may hold off on making aggressive bearish bets on the JPY, awaiting the crucial Bank of Japan (BoJ) policy meeting later this week.

The BoJ is expected to keep interest rates unchanged when it announces its policy decision on Thursday, given the risks posed to Japan's fragile economy from US tariffs. However, rising inflation in Japan leaves the door open for potential tightening measures by the BoJ. Geopolitical tensions and uncertainty over US President Donald Trump’s trade policies continue to keep investors cautious. Additionally, expectations for more aggressive policy easing by the Federal Reserve (Fed) may limit the upside for the USD and provide some support to the lower-yielding JPY.

From a technical standpoint, the USD/JPY pair struggled to maintain levels above the 100-period Simple Moving Average (SMA) on the 4-hour chart and faced resistance near the 144.00 level. With oscillators in negative territory on both the daily and hourly charts, a break below the 142.00 round figure could trigger further bearish momentum. This would likely push the pair towards the mid-141.00s and possibly toward the 141.10-141.00 support zone. A continued decline could bring the pair closer to the multi-month low below the 140.00 psychological mark seen last week.

On the upside, the immediate resistance is around the 142.60-142.65 range. A break above this level could lead to short-covering and lift the USD/JPY pair towards the 143.00 level, with the next resistance zone near 143.40-143.45. Further buying momentum could push the pair past the 144.00 mark, and sustained strength above this level would signal a near-term bottom, opening the door for further upside potential.