Japanese Yen Slips Toward Monthly Lows on Dovish BoJ Outlook, Trade Uncertainty

Japanese Yen Stays Weak Near Monthly Lows Amid BoJ Rate Doubts and Trade Anxiety

The Japanese Yen (JPY) continues to depreciate against the US Dollar (USD) in early Wednesday trading, with the USD/JPY pair retesting its monthly low. The weakness in the Yen comes as the Bank of Japan (BoJ) maintains an ambiguous stance on rate hikes, pushing investor expectations for the next policy tightening out to Q1 2026.

BoJ Rate Outlook Pressures the Yen

The BoJ’s dovish tone and its continued caution regarding Japan’s economic recovery signal that a significant rate hike may not materialize anytime soon. As a result, the JPY lacks support, extending a four-day losing streak against the USD.

Additionally, unresolved trade tensions between the US and Japan following inconclusive talks between US President Donald Trump and Japanese Prime Minister Shigeru Ishiba at the recent G7 summit have sparked investor uncertainty. Concerns over the economic fallout from potential US tariffs further weaken the JPY.

USD/JPY Eyes Fed Decision

Although the US Dollar paused its recent rally amid caution ahead of the Federal Reserve’s interest rate decision, the lack of strong buying pressure hasn’t stopped USD/JPY from drifting higher. Markets now await Fed commentary and the updated dot plot projections for direction.

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