Yen Weakens as BOJ Cuts Growth Forecasts, USD/JPY Eyes Breakout Above ¥144.65

May 1, 2025: BOJ Keeps Rates Steady, Downgrades Growth Outlook

The Bank of Japan (BOJ) left its short-term interest rate unchanged at 0.5% as expected. But the decision came with a big downgrade to Japan’s growth forecast.

The BOJ now sees GDP growth of 0.5% for the fiscal year ending March 2026, down from 1.1% previously. Weaker exports and U.S. tariff policies are the reasons. Inflation target was also revised, with 2% expected around late fiscal 2026, a delay from previous estimates.

BOJ Governor Kazuo Ueda said the need for policy flexibility due to “high uncertainty” in global trade and inflation.

USD/JPY Rises to 144.65 as Yen Weakens

The yen weakened on the BOJ’s dovish tone and USD/JPY rose to 144.65, its highest since mid-April. The pair has broken above the descending trendline and is now in an uptrend, supported by 50-day EMA at 142.88.

Technical indicators are bullish:

• MACD is positive and widening

• Price is above trendline and key moving averages

• Ascending channel is intact

A close above 144.65 could trigger further upside to 145.29, then 146.40. Failure to hold above resistance could see a pullback to 143.30.

Trade Setup: Positioning for a USD/JPY Breakout

For Traders

• Entry Point: Buy if USD/JPY closes above 144.65 with volume

• Target 1: 145.29

• Target 2: 146.40

• Stop-Loss: Below 143.30

Key to Watch:

• U.S. economic data, especially inflation and employment reports

• BOJ commentary and inflation trends

• Geopolitical and trade updates between Japan and U.S.

Bottom Line:

With the BOJ on hold and global uncertainty rising, USD/JPY is ready to break. But as always, confirmation and risk management are key.