USD/JPY Rally Extends Beyond 145.50 as BoJ Tightening Doubts Grow

USD/JPY Rally Extends Beyond 145.50 as BoJ Tightening Doubts Grow

The USD/JPY currency pair continues its upward trend, breaking above 145.50 on Wednesday, as renewed concerns over the Middle East ceasefire and uncertainty around the Bank of Japan’s (BoJ) tightening stance weigh heavily on the Japanese Yen.

Ceasefire Optimism Fades, Lifting the Dollar

After a brief rally in risk assets on Tuesday, markets grew cautious on Wednesday. A new US intelligence assessment suggested that Iran’s nuclear program was only temporarily set back, not permanently dismantled—raising concerns that the Israel-Iran ceasefire may not be sustainable.

BoJ Uncertainty Adds Pressure to the Yen

The BoJ’s Summary of Opinions, released earlier today, showed that policymakers remain divided on the bank’s next steps, with trade tensions and tariff uncertainties—especially those stemming from the US—causing hesitation in advancing monetary tightening.

This dovish tilt has fueled JPY selling, while the US Dollar—despite broader headwinds from Fed rate cut speculation—benefits from safe-haven appeal amid geopolitical tension.

Fed Cut Expectations Limit USD Upside

Although the Dollar has regained some ground, growing market consensus around a Federal Reserve rate cut in the second half of 2025 is limiting its upside potential. Investors will be closely watching upcoming US macro data and Fed commentary for confirmation.

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