Chart of the day - USDJPY (26.03.2025)

The Japanese yen was the weakest G10 currency today. JPY began to weaken sharply after Governor Ueda’s speech, which was perceived as dovish by financial markets. At the moment, the losses have been partially recovered, but USDJPY is still up 0.11% at 150.1000.

The Governor of the Bank of Japan (BOJ), Kazuo Ueda, focused his speech on the state of the Japanese economy and the BOJ’s monetary policy outlook.

• State of inflation: Ueda noted that while inflation in Japan is rising, core inflation — excluding highly volatile components — remains slightly below the BOJ's 2% target. He emphasized that the central bank has not yet fully achieved its price stability goal, and the recent high inflation was mainly due to temporary factors likely to subside and are not a reason for tightening monetary policy.

• Cautious policy approach: He stressed the importance of carefully monitoring economic and price developments before making any further monetary policy decisions, signaling a cautious and prudent approach to future changes.

• Impact of a weak yen: Ueda acknowledged that the weak yen has affected import prices, contributing to inflationary pressure. However, he clarified that the BOJ will not use monetary policy to directly influence exchange rates.

• Inflation risks: He emphasized the need for vigilance, as core inflation could potentially accelerate faster than current BOJ projections suggest.

Ueda’s comments were interpreted by the market as dovish, suggesting that the BOJ is unlikely to raise interest rates in the near term. Following Ueda’s speech, the Japanese yen weakened against the U.S. dollar, losing 0.40% to 150.6000.

USDJPY D1

In the long term, the USDJPY rate is at a key resistance level around 150 JPY per USD. If this level is broken, we could expect a move toward 151.8000–153.0000. Conversely, on the downside, the nearest support level lies just above 148.8000.

Source: xStation 5