BoJ Cuts Growth Outlook, USD/JPY Eyes ¥147.36 as NFP Looms
The yen weakened Friday as the Bank of Japan (BoJ) cut its economic growth forecast from 1.1% to 0.5% for the fiscal year...
Quick overview
- The yen weakened as the Bank of Japan cut its economic growth forecast from 1.1% to 0.5% and maintained steady short-term interest rates.
- Governor Kazuo Ueda highlighted global trade uncertainties that may hinder the central bank's inflation goals, contributing to a fourth consecutive day of yen decline.
- Despite weaker U.S. economic data, the dollar remains strong, with USD/JPY approaching 146.00 ahead of key employment reports.
- The USD/JPY pair is testing major resistance levels, with potential breakout targets set at 146.52 and 147.36.
The yen weakened Friday as the Bank of Japan (BoJ) cut its economic growth forecast from 1.1% to 0.5% for the fiscal year and trimmed its inflation outlook. With short-term interest rates held steady at 0.5%, Governor Kazuo Ueda warned that global trade uncertainty—especially around U.S. tariffs—may delay achieving the central bank’s 2% inflation goal.
The dovish tone forced investors to back off on rate hike expectations and the yen fell for a fourth day. Japan’s unemployment rate rose to 2.5% in March and Finance Minister Katsunobu Kato hinted at using the country’s massive U.S. Treasury holdings as leverage in future trade negotiations.
Dollar Rises as Traders Eye U.S. Jobs
Despite softer U.S. data, the dollar is strong, with USD/JPY heading towards 146.00 in Asia. The move follows a weak labor backdrop:
Initial Jobless Claims: 241K, highest since February
ISM Manufacturing PMI: 48.7, contraction
ADP Private Jobs: Missed forecasts, labor market slowdown
Q1 GDP: Contracted for the first time since 2022
Now it’s all about Friday’s Non-Farm Payrolls (138K) and Unemployment Rate (4.2%). A weaker print will pressure the dollar, a surprise beat will boost yields and push USD/JPY higher.
USD/JPY Technical: Key Breakout Ahead?
The pair is testing major resistance at 145.25, just below the 50-day EMA and descending trendline. This also aligns with the 0.618 Fibonacci from the March-April drop—make or break for bulls and bears.
MACD has turned positive, a bullish signal after weeks of sideways action. A strong NFP will trigger a breakout to 146.52 or 147.36, rejection here will pull the pair back to 144.10.
Trade Setup
Buy: Above 145.80
Targets: 146.52 147.36
SL: 144.10
Tip: Wait for the candle to close above trendline.
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