The Japanese yen continued to weaken on Monday, as investors favored riskier assets amid improving market sentiment and kept a close watch on the Bank of Japan for policy direction. The currency traded defensively against most major peers, struggling to attract demand in a risk-on environment.
Global equity markets extended gains, driven by easing geopolitical tensions and better-than-expected economic data from key economies. This positive risk tone dampened appetite for safe-haven currencies like the yen, which often strengthens during periods of uncertainty.
USD/JPY 4-H Chart as of April 30th, 2025 (Source: TradingView)
The yen’s decline comes as markets await the Bank of Japan’s upcoming policy announcement, where any signs of a shift from its ultra-loose stance could spark volatility. However, expectations remain muted, with many economists predicting that the BoJ will maintain its current framework amid fragile domestic inflation.
“Unless the BoJ signals a firm pivot, the yen is likely to stay on the back foot,” one strategist said. Japan’s negative interest rates and ongoing bond-buying programs continue to set it apart from other major central banks, which have either paused or reversed their tightening cycles.
The US dollar remained firm against the yen, supported by strong economic readings and persistent expectations that the Federal Reserve may delay rate cuts. The interest rate divergence between Japan and the US remains a key driver of currency flows.
Looking ahead, traders will focus on the BoJ’s language around inflation and yield control, while monitoring broader risk sentiment globally. For now, the yen appears likely to remain under pressure unless there is a significant shift in policy or a return to risk-off conditions.
