Japanese Yen Recovers from One-Week Low vs USD Ahead of FOMC Minutes

Japanese Yen Recovers from One-Week Low vs. USD but Faces Limited Follow-Through Ahead of FOMC Minutes

The Japanese Yen (JPY) managed to bounce back from a one-week low against the US Dollar (USD) during Wednesday’s trading session, but the recovery lacked strong momentum. The initial decline came amid reports that Japan plans to intervene to contain rising yields on Japanese Government Bonds (JGBs), which sparked some selling pressure on the Yen in a generally risk-on market environment.

Despite the rebound, the Yen’s upside remains capped as investors await further signals from the upcoming Federal Open Market Committee (FOMC) minutes. The US Dollar continues to find support from positive US economic data released recently, which helped strengthen the USD/JPY currency pair.

Market participants are also balancing the contrasting monetary policies between the Bank of Japan (BoJ) and the US Federal Reserve (Fed). While the BoJ is expected to continue raising interest rates in response to increasing inflation pressures in Japan, the Fed is widely anticipated to implement further rate cuts throughout 2025. This divergence contributes to the mixed trading dynamics for the Yen.

Additionally, ongoing uncertainties around US trade policies and geopolitical risks provide some support to the Yen’s safe-haven appeal, preventing sharper declines despite the broader risk-on sentiment.