USD/JPY declines to near 143.00 as Japanese Yen outperforms, BoJ policy in focus

• USD/JPY falls to near 143.00 amid strength in Japanese Yen ahead of BoJ's policy on Thursday.
• The BoJ is expected to keep rates steady at 0.5% amid uncertainty over how Trump's tariff policies will shape the global economic outlook.
• US Bessent has indicated that the ball is in China's court when asked about development on US-China trade talks.

The USD/JPY pair falls sharply to near 143.00 during North American hours on Monday. The pair declines as the Japanese Yen (JPY) trades strongly at the start of the week, with investors awaiting the monetary policy announcement by the Bank of Japan (BoJ) on Thursday.

On Monday, Japanese markets remained closed on account of Showa Day.

This week, the BoJ is expected to leave interest rates at their current levels of 0.5% for the second time in a row. Therefore, investors will pay close attention to the monetary policy statement and Bank Governor Kazuo Ueda's press conference to know whether the central bank will raise interest rates in the near term.

Investors doubt that the BoJ will hike its borrowing rates soon, as tariffs announced by United States (US) President Donald Trump are expected to diminish Japan's Gross Domestic Product (GDP) growth. However, accelerating inflationary pressures keep the doors of tight monetary policy wide open.

Statistics Bureau of Japan reported on Friday that Tokyo Consumer Price Index (CPI) excluding Fresh Food rose at a robust pace of 3.4% in March, compared to estimates of 3.2% and the prior release of 2.4%.

Meanwhile, the US Dollar (USD) ticks lower amid uncertainty over trade talks between the US and China. During North American trading hours on Monday, the comments from US Treasury Secretary Scott Bessent have indicated that the outlook for US-China trade is in the hands of Beijing. "I believe that it's up to China to de-escalate, because they sell five times more to us than we sell to them, Bessent said in an interview on CNBC's Squawk Box and added, so these 120%, 145% tariffs are unsustainable. These comments came after Bessent was asked about progress in trade talks with China and how long higher tariffs by both nations will be sustained. Bessent further added that Chinese exemptions show "they want de-escalation on trade."

Last week, China stated that it is considering suspending additional tariffs on imports of medical equipment and some industrial chemicals from the US.