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Published: 28 April 2026,06:31
Daily Market Analysis New
*The Japanese yen remains under pressure as the Bank of Japan maintains ultra-loose policy, widening yield gaps and fueling carry trades against higher-yielding currencies.
*Markets expect no change from Kazuo Ueda, but any hawkish signals toward a June hike could trigger a short-term yen rebound.
*Rising oil prices and geopolitical tensions add downside risk, while strong risk sentiment and G10 yield differentials keep the yen biased weaker.
The Japanese yen (JPY) has emerged as one of the weakest performers among G10 currencies in recent months. Persistent ultra-low interest rates, a wide policy divergence with major central banks, and heightened geopolitical uncertainties have weighed on the currency, pushing USD/JPY toward the psychologically important 160 level.
The yen’s underperformance stems primarily from the Bank of Japan’s (BoJ) gradual and cautious approach to monetary normalization. With the policy rate currently at 0.75%, significant yield gaps remain against the US Federal Reserve and other G10 peers. This has encouraged carry trades that sell the yen to fund higher-yielding assets.
Additionally, Japan’s heavy reliance on energy imports has amplified pressure amid ongoing Middle East tensions, which have driven up oil prices and clouded the inflation outlook. While the yen occasionally benefits from safe-haven flows during acute risk-off episodes, these gains have proven short-lived as structural factors—low real rates and modest wage growth—continue to cap appreciation. Cross rates such as EUR/JPY and AUD/JPY have reflected the yen’s softness, with the currency struggling to sustain rebounds.
The BoJ concludes its two-day Monetary Policy Meeting today (28 April 2026). Markets overwhelmingly expect the central bank to hold rates steady at 0.75%, with near-zero probability priced for a cut and very low odds of a 25bp hike. Recent comments from Governor Kazuo Ueda and internal sources indicate a preference for patience given uncertainties surrounding the Middle East conflict, its impact on energy prices, and broader economic data.
The accompanying Outlook for Economic Activity and Prices may see upward revisions to inflation forecasts due to higher oil costs, while growth projections could be trimmed. Any dovish tilt in the statement or press conference—such as downplaying near-term tightening—would likely reinforce yen weakness. Conversely, a stronger-than-expected hawkish bias pointing to a June hike could trigger a short-term relief rally.
Against other G10 currencies, JPY crosses may see continued pressure, particularly versus higher-yielding peers like the AUD. A sustained de-escalation in geopolitical tensions or stronger global risk appetite would exacerbate yen selling. Traders should monitor post-decision rhetoric closely, as volatility is expected to spike. Given the event risk, prudent position sizing and tight risk management are recommended.
Technical Analysis
GBP/JPY previously traded with strong bullish momentum, driving the pair to a fresh all-time high above the 215.00 level. Following this rally, momentum began to fade, leading to a period of sideways consolidation that persisted for several weeks.
After undergoing a minor technical retracement, the pair has now broken out of its range-bound structure. This breakout signals a potential continuation of the broader bullish trend, suggesting that buyers may be regaining control of the market.
As long as the pair sustains above the former range resistance, the bullish bias is likely to remain intact, with scope for further upside in the near term.
Resistance Levels: 216.20, 217.60
Support Levels: 214.70, 213.15
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