The Japanese Yen (JPY) trades with a negative bias against its American counterpart for the second straight day on Wednesday as a positive risk tone seems to undermine demand for traditional safe-haven assets. US President Donald Trump signed an order to ease the impact of new tariffs on the auto industry, which, along with signs of further trade deals, boosts investors' confidence. Apart from this, disappointing domestic data turns out to be another factor weighing on the JPY.

Any meaningful JPY depreciation, however, seems elusive as traders might opt to move to the sidelines ahead of the crucial two-day Bank of Japan (BoJ) policy meeting starting today. The BoJ will announce its decision on Thursday and is widely expected to hold interest rates steady amid the risk to the fragile economy from US tariffs. However, broadening inflation in Japan keeps the door open for further BoJ policy normalization, which, in turn, should act as a tailwind for the JPY.
Government data released earlier this Wednesday showed that Japan's Industrial Production shrank 1.1% in March, much more than expected. Adding to this, Japan's Retail Sales also fell short of estimates and grew 3.1% YoY in March, acting as a headwind for the Japanese Yen.
The Bank of Japan kickstarts its policy meeting today and will announce its decision on Thursday. The central bank is expected to move cautiously and pause further interest rate hikes amid growing concerns that the new US tariffs could sharply slow Japan's economic growth.
Expectations beyond the April meeting are divided amid mixed economic signals from Japan. However, persistent inflationary pressures and bumper pay hikes offered by big firms this year give the BoJ headroom to continue tightening its monetary policy this year.

Source: Fxstreet