Japanese yen hits two-month high amid BoJ expectations | 06 February 2025

USDJPY:

The Japanese yen (JPY) remains in plus against its US counterpart during the Asian session on Thursday amid growing acceptance that the Bank of Japan (BoJ) will continue to raise interest rates. Rates were confirmed by better-than-expected Japanese payrolls data on Wednesday. In contrast, the Federal Reserve (Fed) is expected to further reduce borrowing costs by the end of this year. This will narrow the rate differential between Japan and the US, which will prove to be another factor fuelling inflows into the low-yielding Japanese yen.

Meanwhile, the prospect of further Fed policy easing as well as the recent decline in US Treasury bond yields is keeping the US Dollar (USD) exchange rate near its lowest level in more than a week. This, in turn, is putting downward pressure on the USD/JPY pair for the third consecutive day and driving spot prices towards the 151.80 area, the lowest level since 12 December. However, it remains to be seen whether the yen bulls can maintain control amid concerns that Japan will also be a possible target for US President Donald Trump's trade tariffs and risk-on sentiment.

Trade recommendation: Watching the level of 151.80, trading mainly with Sell orders

Fund your account with cryptocurrency and you will receive up to 10% in balance on your first deposit. The additional funds will be used for trading, increasing trading volumes and helping you withstand drawdowns.