Japanese Yen accelerates the downtrend after BoJ Governor Ueda's comments

• The Japanese Yen dives to a one-month low after the BoJ's decision to leave rates unchanged. 
• The Fed's hawkish shift remains supportive of elevated US bond yields and also weighs the JPY. 
• The risk-off impulse could support the safe-haven JPY and cap the upside for the USD/JPY pair. 

The Japanese Yen (JPY) continues losing ground following Bank of Japan (BoJ) Governor Kazuo Ueda's comments at the post-meeting press conference and dropped to over a one-month low against its American counterpart in the last hour. The lack of any fresh signals about a potential rate hike during the first quarter of 2025 continues to undermine the JPY. Adding to this, the prospects for a slower rate cut by the Federal Reserve (Fed) remain supportive of a further rise in the US Treasury bond yields and contribute to driving flows away from the lower-yielding JPY. 

Meanwhile, the Fed's hawkish outlook for 2025 assists the US Dollar (USD) to preserve the overnight strong gains to a two-year high and provides an additional boost to the USD/JPY pair. That said, the risk-off impulse, along with geopolitical risks and trade war fears, could provide some respite to the safe-haven JPY. Nevertheless, the fundamental backdrop seems tilted in favor of the JPY bears and suggests that the path of least resistance for the currency pair is to the upside. Traders now look to the US macro data for short-term opportunities later during the North American session. 

Japanese Yen selling bias remains unabated after BoJ Governor Ueda's comments

• The Bank of Japan decided to keep the short-term rate target unchanged in the range of 0.15%-0.25% after the conclusion of a two-day monetary policy review meeting this Thursday.
• The BoJ said it expects CPI to pick up in 2025, amid a virtuous cycle of higher wages and increased private consumption and wanning effects of the recent government subsidies.
• BoJ Governor Kazuo Ueda reiterated that the central bank will keep adjusting degree of easing if the outlook is realised, although acknowledged uncertainties surrounding economy and prices.
• This comes hours after the Federal Reserve lowered its benchmark policy rate by 25 basis points on Wednesday to the 4.25%-4.50% range, marking the third rate cut since September.
• Meanwhile, the Fed's so-called dot plot indicated that policymakers now see just two quarter-point rate cuts next year compared to four rate cuts forecasted in September. 
• In his post-meeting press conference, Fed Chair Jerome Powell said that inflation remains somewhat elevated relative to the central bank’s 2% longer-run goal. 
• The yield on the benchmark 10-year US government bond recorded its highest closing since May 31 and the US Dollar shot to a two-year high after the Fed's hawkish cut.
• Elevated US bond yields, along with expectations that the Bank of Japan will keep interest rates unchanged, further drive flows away from the lower-yielding Japanese Yen.  
• Later during the early North American session, the US macro data – the final Q3 GDP print and Weekly Initial Jobless Claims – might provide some impetus. 
• The market attention will then shift to the US inflation data – the US Personal Consumption Expenditures (PCE) Price Index, due for release on Friday. 

USD/JPY might now aim to challenge multi-month top, around the 156.75 area

Against the backdrop of the recent strong move up from 100-day Simple Moving Average (SMA) support, or the monthly low, a subsequent strength beyond the 155.00 psychological mark could be seen as a key trigger for bullish traders. Furthermore, oscillators on the daily chart have been gaining positive traction and are still away from being in the overbought zone. Hence, a sustained strength beyond the said handle should allow the USD/JPY pair to surpass the 155.40-155.45 intermediate hurdle and aim to reclaim the 156.00 mark. The momentum could extend further towards testing the multi-month top, around the 156.75 area touched in November.

On the flip side, the 154.25 area now seems to act as an immediate support ahead of the 154.00 mark. Some follow-through selling might expose the weekly low, around the 153.15 region, which if broken could drag the USD/JPY pair to the next relevant support near the 152.55-152.50 zone. Any further decline could be seen as a buying opportunity and remain limited near the very important 20-day SMA pivotal support near the 152.20 region. Failure to defend the said support levels might shift the near-term bias in favor of bearish traders and make spot prices vulnerable to weaken further towards the 151.00 round-figure mark.