Japanese Yen Weekly Forecast: US Data, Tariffs, and BoJ Set Stage for Choppy Trading

USD/JPY Ends Three-Week Losing Streak – What’s Next for the Yen?

Trade developments lifted demand for risk assets in the week ending April 25 as President Trump announced the resumption of US-China trade talks. Optimism over an end to the tit-for-tat tariff measures drove US dollar demand and snapped the US Dollar Index’s four-week losing streak.

Risk-on sentiment weighed on the Japanese Yen and gold. The USD/JPY gained 1.08%, closing at 143.637, while gold fell 0.25% to $3,319.

Looking ahead, trade developments will remain a key driver for the USD/JPY pair. However, investors should also consider the Bank of Japan’s monetary policy decision and key economic indicators that could influence price action.

Retail Sales and Japan’s Economy Outlook

Focus turns to Japanese retail sales due Wednesday, April 30. Economists forecast retail sales to rise 3.5% year-on-year in March, up from 1.4% in February. A jump in private consumption could boost bets on an H1 2025 Bank of Japan rate hike. With private consumption accounting for 55–60% of Japan’s GDP, stronger spending could signal upward inflationary pressure and broader economic resilience.

Significantly, a surge in spending would reflect the effects of rising wages on household spending trends, crucial for the BoJ.

Rising bets on a near-term BoJ rate hike would boost Yen demand. Conversely, a softer retail sales reading may pressure the Yen.

BoJ Decision and Policy Outlook

The heavily anticipated Bank of Japan monetary policy decision and quarterly outlook report will take center stage on Thursday, May 1. Markets expect the BoJ to hold rates at 0.5%, exposing the USD/JPY pair to the Bank’s policy outlook.

Support for a near-term interest rate hike could fuel Yen appetite and pressure USD/JPY. However, a more cautious stance could weaken the Yen.

Labor Market Trends and Tariffs

On Friday, May 2, Japan’s labor market will be in focus amid easing trade tensions. Economists expect the unemployment rate to remain at 2.4% in March while forecasting the jobs/applications ratio to rise from 1.24 in February to 1.25 in March.

A tighter labor market could support wage growth and consumer spending, fueling inflationary pressures. Conversely, rising unemployment may curb wage growth and spending, supporting a less hawkish BoJ stance.

USD/JPY Outlook: Balancing Trade and Central Bank Signals

USD/JPY may experience a choppy week. Markets will react to Japanese data and BoJ commentary while monitoring global trade headlines.

• Bullish Yen Scenario: Upbeat retail sales and labor market data, a hawkish BoJ outlook, or an escalation in the global trade war could send USD/JPY below 140.
• Yen Carry Trade Unwind Risks: A USD/JPY drop below the September 2024 low of 139.576 could accelerate the Yen Carry Trade Unwind.
• Bearish Yen Scenario: Weaker data, a dovish BoJ stance, or a de-escalation in the global trade war may drive the pair toward 145.

US Data to Steer Dollar Sentiment

While trade developments are crucial for USD/JPY trends, US data will also influence USD/JPY moves. Key releases this week include:

• JOLTs Job Openings (April 29).
• CB Consumer Confidence (April 29).
• ADP Employment Change (April 30).
• US GDP Q1 (April 30).
• Personal Income and Outlays Report (April 30).
• US Jobs Report (May 2).

Tighter labor market conditions and rising wages may boost consumer spending, fueling demand-driven inflation. A higher inflation outlook may delay Fed rate cuts, bolstering US dollar demand. Conversely, higher unemployment and softer wages may raise bets on an H1 2025 Fed rate cut.

Labor market forecasts:

• JOLTs job openings to fall from 7.568 million in February to 7.5 million in March.
• ADP employment to increase by 130k in April, down from 155k in March.
• Unemployment rate to remain at 4.2% in April.
• Average hourly earnings to rise 3.9% year-on-year in April, up from 3.8% in March.
• Nonfarm payrolls to rise 130k in April after a 228k increase in March.

Inflation trends will also play a pivotal role. Economists expect the Core PCE Price Index to increase 2.5% year-on-year in April after rising 2.8% in March. Softer inflation may raise expectations for a June Fed rate cut. Conversely, a higher inflation reading would delay an H1 2025 Fed move, boosting US dollar demand.

While labor market and inflation data are crucial for the Fed, Q1 GDP numbers will draw interest given US tariffs and the potential impact on the economy. Economists expect US GDP to grow 0.4% quarter-on-quarter in Q1 2025, down from 2.4% in Q4 2024. A softer reading may trigger recession concerns, supporting a more dovish Fed stance if trade tensions persist.

President Trump’s tariff signals will influence USD/JPY trends.

Potential Price Scenarios

• Bullish US Dollar Scenario: Easing trade tensions and positive economic data could drive USD/JPY toward 145.
• Bearish US Dollar Scenario: An escalating trade war or weaker-than-expected US economic data may pull USD/JPY below 140.

Short-term Forecast:

This week’s USD/JPY trajectory will depend on the interplay between trade news, BoJ decisions, and the string of US data, including inflation and labor market trends.

USD/JPY Price Action

Daily Chart

On the daily chart, the USD/JPY trades below the 50-day and 200-day EMAs, maintaining a bearish bias.

A break above last week’s high of 144.028 could signal a move toward 145. A decisive move through 145 may bring the 50-day EMA into view.

On the downside, a drop below 142 could expose last week’s low of 139.883 and the September 2024 low of 139.576.

Final Thoughts

With multiple risk events ahead, USD/JPY is likely to remain volatile. Traders should closely watch for shifts in trade policy, central bank messaging, and macroeconomic indicators to guide their positioning.

For a deeper dive, explore our technical analysis here.