USD/JPY weakens below 142.50 as Japanese CPI came in at 3.6% YoY in March

• USD/JPY loses ground in Friday’s early Asian session. 

• Japanese CPI climbed 3.6% YoY in March; core CPI rose 3.2%. 

• The US Initial Jobless Claims fell to the lowest level in two months. 

The USD/JPY pair softens to near 142.25 in a thin trading volume session on Friday. The US Dollar (USD) edges lower against the Japanese Yen (JPY) amid concerns over the economic impact of tariffs. 

Data released by the Japan Statistics Bureau on Friday showed that the National Consumer Price Index (CPI) rose by 3.6% YoY in March, compared to the previous reading of 3.7%. Meanwhile, National CPI ex Fresh food came in at 3.2% YoY in March versus 3.0% prior. The figure was in line with the market consensus. 

Finally, CPI ex Fresh Food, Energy rose 2.9% YoY in March, compared to the previous reading of 2.6%. The Japanese Yen remains strong against the Greenback in an immediate reaction to the Japanese inflation data. 

However, the upside for the JPY might be limited as the Bank of Japan (BoJ) officials signaled a pause in considering interest-rate hikes, stressing the need to monitor uncertainties heightened by US tariff measures. BoJ Governor Kazuo Ueda said on Thursday, “We will assess the economy and inflation carefully for an appropriate policy decision by being duly mindful of rising uncertainties stemming from US tariff measures and other issues.” 

Fellow board member Junko Nakagawa echoed Ueda’s view in separate remarks, saying that it is necessary to monitor developments with high vigilance. Japan’s Finance Minister Katsunobu Kato is expected to meet separately with Treasury Secretary Scott Bessent to continue the negotiations initiated by Prime Minister Shigeru Ishiba's top tariff negotiator Ryosei Akazawa. Investors will keep an eye on developments in country-specific trade negotiations.

The US economic data Thursday were mixed. The US Initial Jobless Claims fell to the lowest level in two months, signaling a stable labor market. Additionally, the Philadelphia Fed Index declined, missing the estimations, a warning shot from manufacturing.