Japanese yen fell for the third day in a row.

On Wednesday, the Japanese Yen (JPY) fell for the third day in a row, returning to its lowest level against the US dollar since November 2023, which it reached last week.

The uncertainty surrounding the BoJ’s potential policy moves continues to damage the JPY.

Despite hiking interest rates for the first time since 2007, the Bank of Japan (BoJ) adopted a dovish tone at the end of the March policy meeting, stopping short of offering any direction on future policy actions, or the speed of
Policy normalization. This, in turn, keeps the JPY bulls on the defensive, albeit verbal interventions from Japanese officials assist limit additional losses.

The US Dollar (USD), on the other hand, continues to benefit from a positive prognosis for the US economy and concerns that the Federal Reserve (Fed) would lower interest rates three times this year as expected, despite still sticky inflation. This, in turn, is viewed as another factor supporting the USDJPY pair and indicating more advances. Traders may opt to wait for the release of the US Personal Consumption and Expenditure (PCE) Price Index on Friday for more clues regarding the Fed’s policy path before putting new directional bets.

Daily Market Movers: The Japanese yen stays down amid contrasting forecasts from the BoJ and the Fed.

At the end of its March meeting, the Bank of Japan stated that it plans to maintain an accommodative monetary policy for an extended period, further undermining the Japanese yen.
On Wednesday, BoJ Board Member Tamura Naoki echoed the stance, saying that the bank will lead monetary policy appropriately in response to economic, price, and financial developments.
Japan’s finance minister said on Tuesday that he would not rule out any steps to deal with the sinking currency and that excessive volatility is causing problems for corporate operations.
Masato Kanda, Japan’s senior currency ambassador, stated that the present JPY weakening does not reflect fundamentals and described previous swings as speculative, indicating a willingness to Respond to volatility.

A minor USD increase provides extra support to USDJPY and benefits bullish traders.

The US Dollar builds on the previous day’s small gains with the release of the optimistic Durable Goods Orders data, which showed a 1.4% increase, slightly more than predicted in February.
Separately, the Conference Board said that the US Consumer Confidence Index fell to 104.7 in March, slightly changed from the previous month’s reading of 104.8, amid diminishing recession fears.
Furthermore, consumer inflation expectations rose to 5.3% in the reported month from 5.2% in February, perhaps forcing the Federal Reserve to hold interest rates higher for longer.
Traders, however, appear reluctant to put aggressive direction bets and prefer to wait for the release of the critical US Personal Consumption and Expenditure (PCE) Price Index data on Friday.