The Japanese Yen (JPY) continued to underperform against major currencies, with both the USD/JPY and AUD/JPY pairs extending their recent gains on Friday. The USD/JPY pair rebounded from a one-week low near 158.25, climbing to the mid-159.00s during the Asian session, marking its third consecutive day of gains. This move was supported by declining market expectations for a Bank of Japan (BoJ) rate hike in April and concerns over the economic implications of the Middle East conflict, particularly instability in the Strait of Hormuz due to a US naval blockade of Iranian ports. These factors have provided a tailwind for the US Dollar, helping it recover from its lowest level since late February, although hopes for Iran diplomacy and fading hawkish Federal Reserve bets have capped further upside for the USD/JPY pair [1].
Technical indicators for USD/JPY remain bullish, with the Relative Strength Index (RSI) at 61 and the MACD line turning higher in positive territory, suggesting strengthening upside momentum. Initial support is identified at 159.47, with a deeper cushion at the 200-period EMA of 158.46. As long as the pair remains above this level, dips are likely to be viewed as corrective within the prevailing bullish structure [1].
Meanwhile, the AUD/JPY cross traded in positive territory for the fifth consecutive day, hovering around 114.30 during the early European session. The Australian Dollar's strength against the Yen is attributed to a hawkish stance from the Reserve Bank of Australia (RBA), with markets pricing in a 65% probability of a rate hike at the next policy meeting, potentially raising the Official Cash Rate (OCR) from 4.10% to 4.35%. RBA Governor Andrew Hauser emphasized the need for rates to reach a level that brings inflation back to the 2%-3% target band, given the headline inflation rate of 3.7% in February [2].
On the Japanese side, BoJ Governor Kazuo Ueda stated that decisions on rate hikes must consider Japan's low real interest rate and noted that current inflation is driven by a 'negative supply shock,' which is harder to address with monetary policy. Additionally, Japan’s Finance Minister Satsuki Katayama indicated readiness for 'bold' action on foreign exchange if needed, following discussions with US Treasury Secretary Scott Bessent and urging the G7 to closely monitor forex moves [2].
According to the latest data, the Japanese Yen was the weakest against the US Dollar among major currencies today, with a 0.21% decline, and also posted losses against the Australian Dollar and Canadian Dollar [1].
CONCLUSION
The Japanese Yen remains under pressure due to dovish signals from the Bank of Japan and geopolitical uncertainties, while hawkish central bank rhetoric in Australia has buoyed the AUD/JPY pair. Technical and fundamental factors suggest continued upside for both USD/JPY and AUD/JPY in the near term. Japanese authorities have signaled potential intervention, but market sentiment currently favors further Yen weakness.