The dollar rose against the yen, supported by comments from Fed officials.
On Wednesday, the US dollar strengthened significantly, supported by cautious comments from Federal Reserve officials. The US dollar index climbed significantly, and the US dollar against the Japanese yen broke through the 148 mark, approaching 149 at one point .
The yen remained under pressure despite the release of the Bank of Japan’s (BOJ) minutes from its July meeting, which showed that some policymakers discussed the possibility of future interest rate hikes.
Bank of Japan meeting minutes: Hawkish tendencies revealed
The minutes of the Bank of Japan’s July meeting showed that while the policy rate remained unchanged at 0.5% , some members expressed the possibility of a future rate hike. The internal debate over inflation, price pressures, and the timing of policy normalization has intensified. Some policymakers believe that with inflation approaching or reaching the Bank of Japan’s 2% target, more aggressive policy tightening is warranted. However, others believe that a cautious stance is warranted given global uncertainties and downside risks.
The minutes also stressed that any policy shift must be gradual and depend on data performance to avoid market turmoil.
Yen reaction and subsequent outlook
The Japanese yen briefly strengthened in early trading Thursday following the release of the July meeting minutes, as more hawkish internal discussions heightened market speculation about future rate hikes. However, despite the Bank of Japan’s hawkish signals, the yen’s upside remained limited. This was primarily due to political uncertainty surrounding the upcoming Liberal Democratic Party leadership election and global trade risks stemming from US tariffs.
USD/JPY daily chart | Source: Ultima Market MT5
From a technical perspective, USD/JPY has broken out of the 146-148 range, but remains constrained by the resistance level of 149.00 . A successful break above this level would open up room for further upward momentum; otherwise, the pair may continue to fluctuate within the range.
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Author：Joshen Stephen｜Senior Market Analyst at Ultima Markets
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