Japanese Yen Pressured by Weak Wage Data, USD Strengthens Above 145.00

USD/JPY Holds Firm as Japanese Yen Faces Pressure on Weak Wage Growth

Japanese Yen Under Pressure as Wage Data Disappoints

The Japanese Yen (JPY) continues to trend lower against the US Dollar (USD) on Monday, as the USD/JPY currency pair stays firmly above the 145.00 psychological mark in the early European session. The Yen’s weakness comes after Japanese real wages fell for the fifth consecutive month in May—marking the steepest decline in nearly two years.

BoJ vs. Fed Divergence Keeps Traders Cautious

Despite the negative local data, sentiment toward the Bank of Japan (BoJ) remains cautiously optimistic. Markets are still pricing in a potential BoJ rate hike, which offers a buffer against excessive JPY losses. This contrasts with growing expectations that the Federal Reserve (Fed) may resume rate cuts in the coming months, capping the upside for the US Dollar.

Geopolitical Risks Add to Uncertainty

Further supporting safe-haven bids in the Yen, geopolitical tensions flared as Israel launched strikes on three Yemeni ports on Monday. Meanwhile, President Trump's volatile trade policy, including fresh tariffs against BRICS-aligned countries, adds another layer of uncertainty, helping limit JPY downside in the broader risk environment.

Outlook for USD/JPY

While the USD remains supported by risk-off flows and trade war rhetoric, JPY’s downside may be limited due to expectations of BoJ action and global geopolitical risks. A daily close below 145.00 could shift sentiment, while the upside remains capped near the 147.00 zone unless fundamentals shift decisively.

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