The Japanese yen struggles to attract buyers despite the strong publication of the underlying CPC of Tokyo

• The Japanese yen retreat as optimism on the commercial agreement between the US and China undermines the demand for safe refuge.
• The strong consumer inflation figures in Tokyo reaffirm bets due to additional rate increases by the BOJ in 2025.
• The moderate expectations of the Fed could limit any significant appreciation of the USD/JPY torque.

The Japanese Yen (JPY) slides down during the Asian session on Friday, since the hopes of a possible unwinding in the commercial confrontation between the US and China continue to support a positive risk tone and moderate the demand for traditional assets of safe refuge. Apart from this, a modest rebound of the US dollar (USD) helps the USD/JPY to overcome the 143.00 mark and reverse part of the back of the previous day from a maximum of almost two weeks.

Meanwhile, government data showed that consumer inflation in Tokyo, the capital of Japan, accelerated drastically in April and reaffirmed market bets for more increases in interest rates on the part of the Bank of Japan (Boj). In contrast, Federal Reserve officials (FED) showed provision for possible interest rate cuts. This, in turn, could limit any significant appreciation of the USD and help contain deeper losses for the JPY of lower performance.

The Japanese Yen is undermined by the decrease in the demand for safe refuge; Betting for an increase in Boj rates should help limit losses

• The president of the United States, Donald Trump, told the journalists that the US and China maintained discussions on Thursday to help resolve the commercial war between the two largest economies in the world. In addition, a White House official said that conversations had been held in a lower level person, as well as a phone call between US staff and China this week.
• This feeds the hopes of a rapid commercial resolution between the US and China, increases the confidence of investors and weakens the demand for safe refuge assets such as YEN. However, China had previously stated that discussions had not been carried out.
• The contradictory statements underline the uncertainty about the current commercial war, which could continue to come volatility in global financial markets and act as a tail wind for safe refuge assets. In addition, the perspectives of additional increases in interest rates by the Bank of Japan should limit deeper losses for the JPY.
• The most early published data showed that the Tokyo consumer (CPI) price index grew 3.5% year -on -year in April, from 2.9% in the previous month. In addition, the underlying IPC of Tokyo, which excludes the volatile prices of fresh food, rose 3.4% year -on -year, or a maximum of two years, compared to the 3.2% expected and well above 2.4% in March.
• In addition, an indicator that excludes both fresh food and fuel costs and is closely followed by the BOJ, increased 3.1% in April compared to the previous year, after an increase of 2.2% in the previous month. This points to expanding inflation in Japan and gives the Boj margin to increase interest rates again after an increase of 50 basic points earlier this year.
• On the other hand, the governor of the Federal Reserve, Christopher Waller, said Thursday that he would support an interest rate cut if tariffs begin to affect the labor market. Separately, the president of the Fed of Cleveland, Beth Hammack, declared that a cut of rates as soon as in June could be possible if clear evidence of the economic direction is obtained.
• This counteracts the statements of the president of the FED, Jerome Powell, last week, that the US Central Bank is well positioned to expect greater clarity before considering any adjustment to our policy position. However, operators are still valuing the possibility that the FED reduces indebtedness costs at least three times by the end of this year.
• The prospects for a more aggressive relief by the FED, to a large extent, eclipsed the macroeconomic data of the USA mostly optimistic published on Thursday. In fact, the US Department of Labor reported that initial unemployment applications increased modestly to 222,000 for the week that ended on April 19 and pointed out the continuous resilience of the labor market.
• In addition, the US Census Office reported that the requests for lasting goods fired 9.2% in March, marking the third consecutive monthly increase and far exceeding market expectations of a 2% increase. The transport team, which also registered its third consecutive monthly increase, led the increase with a 27% leap in April.
• Meanwhile, divergent policy expectations between the BOJ and the Fed, together with the hopes that Japan will reach a commercial agreement with the US, should act as a tail wind for the JPY of lower performance. The main negotiator of Japan, Economy Minister Ryosei Akazawa, will carry out a second round of commercial conversations with US Treasury Secretary, Scott Besent, next week.

The USD/JPY needs to overcome the weekly maximum, around the 143.55 region to support the additional profit prospects

The USD/JPY torque showed some resilience below the Fibonacci recoil level of 23.6% of the March-April fall and the subsequent return movement above the 143.00 mark favors the upward operators. In addition, oscillators in schedules have been gaining positive traction and support the additional profits perspectives. However, the technical indicators in the daily chart, although they have been recovering, still do not confirm a positive bias. Therefore, any additional movement could face a strong resistance near the 143.55 area, or the weekly maximum. However, some continuation purchases could raise cash prices beyond the round figure of 144.00, to the 144.40 area. The latter represents the level of 38.2% of Fibonacci, which if it is exceeded decisively should pave the way for a significant recovery in the short term.

On the other hand, fall below the Fibonacci level of 23.6% could continue to attract some buyers at lower levels near the minimum of the previous night, around the region of 142.30-142.25. This is followed by the round figure of 142.00, below which the USD/JPY torque could slide towards the mid-141.00 en route to the region of 141.10-141.00. The downward trajectory could extend even more towards the intermediate support near the 140.50 area and expose the minimum of several months, levels below the psychological brand of 140.00 touched on Tuesday.