Japanese Yen advances to recent weekly high towards USD regardless of weaker GDP

• The Japanese Yen strengthened towards the USD for the fourth straight day on Friday.
• BoJ fee hike bets overshadow Japan’s weaker Q1 GDP print and underpin the JPY.
• Bets for extra fee cuts by the Fed hold the USD depressed and weigh on USD/JPY.

The Japanese Yen (JPY) scales increased towards its American counterpart for the fourth straight day and touches a recent weekly high throughout the Asian session on Friday. The JPY shopping for stays unabated following Japan’s weaker-than-expected Q1 GDP print amid the rising acceptance that the Financial institution of Japan (BoJ) will hike rates of interest once more. Moreover, commerce negotiations between the US and Japan look like progressing as officers proceed to satisfy commonly, which seems to be one other issue lending help to the JPY.

The aforementioned components overshadow the most recent optimism led by receding fears of an all-out world commerce battle, which lately drove traders towards danger belongings and away from conventional safe-haven belongings, together with the JPY. The US Greenback (USD), however, continues with its battle to draw consumers as indicators of easing inflationary pressures and weaker client spending knowledge reaffirmed bets for extra fee cuts by the Federal Reserve (Fed). This marks a pointy divergence from hawkish BoJ expectations and favors the JPY bulls.

Japanese Yen bulls shrug off weaker Q1 GDP print amid BoJ fee hike bets

• The preliminary studying launched by Japan’s Cupboard Workplace earlier this Friday confirmed that the financial system contracted by 0.2% within the first quarter of 2025 in comparison with a 0.1% decline anticipated and a development of 0.6% within the earlier quarter. On an annualized foundation, Japan’s Gross Home Product (GDP) shrank rather more than consensus estimates, by 0.7% throughout the January to March interval – marking the primary decline in a yr.
• The Financial institution of Japan’s April 30-Could 1 Abstract of Opinions launched earlier this week revealed that policymakers have not given up on climbing rates of interest additional. Furthermore, some BoJ board members noticed scope to renew fee hikes after a brief pause if developments over U.S. tariffs stabilise. Furthermore, BoJ Deputy Governor Shinichi Uchida signaled the central financial institution’s resolve to keep up its rate-hike stance on Tuesday.
• A Reuters survey revealed on Thursday indicated that almost all economists anticipate that the BoJ will maintain rates of interest by way of September, though a slight majority nonetheless see no less than a 25-basis-point hike by the tip of this yr. This comes amid studies that Japan’s high commerce negotiator, Ryosei Akazawa, might journey to Washington as quickly as subsequent week for a 3rd spherical of commerce talks with the US, underpinning the Japanese Yen.
• The report additional said that Japan is contemplating a package deal of proposals to achieve US concessions. Furthermore, Akazawa mentioned that the federal government will proceed to demand evaluation of US tariffs and take all vital steps to supply liquidity support to impacted companies. Earlier, Japan’s Finance Minister Shunichi Kato mentioned that he would search to satisfy US Treasury Secretary Scott Bessent to debate international change according to factors agreed in prior talks.
• The US and China agreed to de-escalate the doubtless damaging commerce battle and slash steep tariffs for no less than 90 days. Including to this, US President Donald Trump mentioned this week that he might see himself dealing straight with Chinese language President Xi Jinping on particulars of a commerce pact. This, together with prospects for additional coverage easing by the Federal Reserve, stays supportive of a constructive danger tone, although it does little to affect the safe-haven JPY.
• The US Bureau of Labor Statistics confirmed on Thursday that the US Producer Value Index (PPI) declined 0.5% in April and rose 2.4% on a yearly foundation. Moreover, the annual core PPI rose 3.1% throughout the reported month, down from 4% in March. The softer-than-expected prints prompt a lower within the costs of products bought by producers, which generally is a precursor to a dip within the total client value inflation.
• Individually, the US Division of Commerce said that Retail Gross sales rose barely by 0.1% in April in comparison with the earlier month’s upwardly revised development of 1.7%. This will increase the probability that the US financial system will expertise a number of quarters of sluggish development and boosts bets for extra rate of interest cuts by the Federal Reserve, dragging the US Treasury bond yields sharply decrease and retaining the US Greenback bulls on the defensive.

USD/JPY might weaken additional under 145.00 and take a look at the 200-period SMA on the H4 timeframe

From a technical standpoint, the intraday downfall drags the USD/JPY pair under the 38.2% Fibonacci retracement degree of the latest goodish restoration from the year-to-date low. On condition that oscillators on the every day chart have simply began gaining damaging traction, acceptance under the 145.00 psychological mark might drag spot costs to the 144.55 space. The latter represents the 200-period Easy Shifting Common (SMA) resistance breakpoint on the 4-hour chart, which is intently adopted by the 50% Fibo. degree, across the 144.30 area. A convincing break under the mentioned help ranges may shift the near-term bias again in favor of bearish merchants and pave the way in which for deeper losses.

On the flip facet, the Asian session peak, across the 145.70 area, now appears to behave as an instantaneous hurdle forward of the 146.00 spherical determine. Any additional transfer up might be seen as a promoting alternative and stay capped close to the 146.60 space, or the 23.6% Fibo. degree. A sustained transfer past the latter, nonetheless, may set off a short-covering rally and elevate the USD/JPY pair past the 147.00 mark, in the direction of the 147.70 intermediate hurdle en path to the 148.00 spherical determine.