Japanese Yen Strengthens for Second Day Amid Tariff Uncertainty and BoJ Rate Hike Hopes

Japanese Yen Strengthens for Second Day Amid Tariff Reinstatement and BoJ Rate Hike Hopes

The Japanese Yen (JPY) is extending its upward momentum for the second straight day on Friday, gaining ground against the rallying US Dollar (USD). The move comes as risk sentiment deteriorates after a US federal appeals court reinstated former President Donald Trump's global tariffs, sparking renewed safe-haven demand for the Yen.

BoJ Rate Hike Expectations Build on Positive Data

Stronger-than-expected Japanese macroeconomic data released earlier Friday bolstered expectations that the Bank of Japan (BoJ) could raise interest rates further in 2025. This domestic optimism is acting as an additional tailwind for the Yen, encouraging fresh buying.

USD Seeks Support Ahead of US PCE Data

Meanwhile, the US Dollar is attempting to stabilize ahead of the upcoming US Personal Consumption Expenditure (PCE) Price Index—the Federal Reserve’s preferred inflation measure. Some traders are repositioning ahead of the report, offering temporary support to the USD/JPY pair, but overall momentum remains with the Yen.

Market Snapshot:

Currency PairCurrent TrendKey DriversUSD/JPYBearish BiasUS tariff news, BoJ rate hike expectations, PCE data

Outlook

Unless the PCE data delivers a significant upside surprise, the JPY is likely to retain strength, especially if risk aversion remains elevated and domestic rate hike expectations continue to rise.

📈 For real-time FX market coverage and in-depth currency analysis, visit Tredu.com Forex