Japanese Yen remains on the front foot against a broadly weaker USD

• The Japanese Yen reverses a part of the previous day's losses against its American counterpart.
• Bets that the BoJ will hike rates again in 2025 and reviving safe-haven demand underpin the JPY.
• The USD drifts lower despite the Fed's hawkish pause and further exerts pressure on USD/JPY.

The Japanese Yen (JPY) ticks higher against its American counterpart during the Asian session on Thursday and reverses a part of the previous day's retracement slide from the weekly high. Minutes from the Bank of Japan's (BoJ) March meeting indicated that the central bank remains ready to tighten further if economic and price outlooks hold. This, along with reviving safe-haven demand, is seen underpinning the JPY, which, along with the emergence of fresh US Dollar (USD) selling, keeps the USD/JPY pair depressed below the 144.00 round figure.

The optimism over the start of US-China trade talks later this week in Switzerland fades rather quickly amid the uncertainty over how a new deal between the world's two largest economies might be structured. Moreover, US President Donald Trump denied lowering tariffs on China, tempering hopes for a quick resolution to the tit-for-tat trade war between the world's two largest economies. Moreover, persistent geopolitical risks keep investors on edge and turn out to be a key factor behind the JPY's outperformance against a broadly weaker USD.

Japanese Yen benefits from BoJ rate hike bets, trade-related uncertainties, and geopolitical risks

• Minutes from the Bank of Japan's (BoJ) monetary policy meeting held on March 18-19 revealed that the central bank remains ready to hike interest rates further if inflation trends hold. Policymakers, however, stressed caution due to global volatility on the back of heightened economic uncertainty stemming from US tariff policies.
• Meanwhile, BoJ Governor Kazuo Ueda said that he is mindful of the impact of the rising food prices on underlying inflation. Furthermore, expectations that sustained wage hikes will boost consumer spending and inflation in Japan suggest that the BoJ may not abandon its rate-hike plans altogether and tighten further in 2025.
• US President Donald Trump tempered hopes for a quick resolution to the US-China trade war by saying that he was not open to lowering the 145% tariffs imposed on China. Trump added that he is in no real hurry to sign any deals, though he said that he will announce a major deal with a big, highly respected country later today.
• On the geopolitical front, Russia and Ukraine engaged in a wave of strikes on Wednesday, ahead of Russian President Vladimir Putin's unilateral three-day ceasefire, which came into force earlier this Thursday. Furthermore, the Israeli military said that it had fully disabled Yemen's main airport in the capital, Sanaa, which is controlled by the Houthis.
• The US Dollar bulls struggle to capitalize on the previous day's move higher despite the Federal Reserve's signal that it is not leaning toward cutting rates anytime soon. In fact, Fed Chair Jerome Powell said that there is a great deal of uncertainty over US trade tariffs and that the right thing to do now is to wait for further clarity.
• Traders now look forward to the US Weekly Initial Jobless Claims, due for release later during the North American session. The focus, however, is Trump's press conference at 14 GMT in the Oval Office, which will play a key role in influencing the broader risk sentiment and drive demand for the safe-haven JPY.

USD/JPY bearish technical setup backs prospects for a further near-term depreciating move

From a technical perspective, the intraday failure near the 144.00 mark favors the USD/JPY pair amid still negative oscillators on the daily chart and against the backdrop of last week's rejection near the 200-period Simple Moving Average (SMA) on the 4-hour chart. Some follow-through selling below the 143.40-143.35 immediate support will reaffirm the negative outlook and drag spot prices below the 143.00 mark, back towards the 142.35 area, or the weekly low. This is followed by the 142.00 round figure, which, if broken, could make the currency pair vulnerable to weakening further.

On the flip side, the 144.00 mark might continue to act as an immediate hurdle ahead of the 144.25-144.30 supply zone. A sustained strength beyond the latter might trigger a short-covering rally and allow the USD/JPY pair to reclaim the 145.00 psychological mark. The momentum could extend further towards the 200-period SMA on the 4-hour chart, currently pegged near the 145.25 region, en route to last week's swing high, around the 146.00 neighborhood.