USDJPY Breaks Higher on Fed Support, BOJ Policy Uncertainty

The U.S. dollar advanced sharply on Wednesday, supported by cautious remarks from Federal Reserve officials. The Dollar Index climbed notably, while USD/JPY surged past 148 to trade just shy of 149, marking a significant move against the Japanese yen.

The yen came under further pressure despite the release of the Bank of Japan’s July meeting minutes, which revealed that some policymakers had discussed the possibility of future rate hikes.

BOJ Minutes Reveal Hawkish Lean

The recently released July BOJ meeting minutes showed that several board members flagged the possibility of future rate hikes, even though the policy rate was left unchanged at 0.5%.

While the board still leaned toward maintaining current rates, the internal debate over inflation, price pressures, and timing of normalization has become more visible.

Some policymakers view inflation as approaching—or already at—the BOJ’s 2% target, arguing for more proactive tightening if conditions permit. But others remain cautious, citing global uncertainties and downside risks as reasons to wait.

The minutes also reinforced that policy moves remain data-dependent, and that any shift must be gradual to avoid market disruptions.

Yen Reaction & FX Implications

The yen showed some strength in early Thursday trading following the release of the BOJ’s July meeting minutes, which revealed a more hawkish internal debate and raised speculation about potential rate hikes ahead.

This comes after USD/JPY had already surged near 149.00 on Wednesday, driven by a stronger U.S. dollar amid cautious Fed commentary.

Despite the hawkish undertone from the BOJ, the yen’s upside remains limited by lingering political uncertainty, particularly the upcoming Liberal Democratic Party leadership contest, as well as global trade risks tied to U.S. tariff policies.

USDJPY Technical Outlook

USDJPY, Daily Chart | Source: Ultima Market MT5

On the technical front, USD/JPY has broken out of its 146–148 range, but remains capped below the 149.00 resistance level. A decisive break above this threshold could open room for further upside momentum, while failure to clear it may keep the pair in consolidation.

With the BOJ tilting toward a more hawkish stance, any divergence between incoming Japanese and U.S. data could still lend support to the yen.

However, a clear breakout above 149.00 or a breakdown below 146.00 will be key signals for renewed directional momentum in USD/JPY.

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