Positive revisions to private consumption and external demand could lead to an upward adjustment to headline GDP. Economic growth momentum, aligning with the BoJ’s growth forecasts, could revive Q3 2025 rate hike bets. A more hawkish BoJ rate stance may boost Japanese Yen demand, pressuring USD/JPY.
Conversely, weaker-than-preliminary numbers may lower expectations of a 2025 BoJ rate hike, weighing on Yen demand and potentially driving USD/JPY higher.
BoJ Governor Kazuo Ueda recently kept rate hikes in play, supporting further moves if inflation and the economy align with projections.
Beyond the GDP, trade headlines continue dictating Yen appetite. Rising trade tensions may boost demand for safe-haven assets such as the Yen, pressuring USD/JPY. However, easing trade tensions could send the pair higher.
USD/JPY Daily Outlook: US Inflation Expectations in Focus
Later in the session, consumer inflation expectations could influence the Fed rate path. Economists expect consumer inflation expectations to rise 3.6% year-on-year in May, mirroring April’s trend.
A higher reading may further dampen expectations of a 2025 Fed rate cut, pushing USD/JPY toward the 50-day Exponential Moving Average (EMA). A break above the 50-day EMA could bring the May 29 high of 146.285 into view.