- USD/JPY weakens to 156.00 as BoJ rate-hike bets surge.
- The BoJ is expected to raise interest rates further by 10 bps as inflation remains above 2%.
- Investors await the US data for fresh guidance on interest rates.
The USD/JPY pair tumbles to near 156.00 in Tuesday’s American session. The asset weakens as the Japanese Yen (JPY) strengthens amid expectations that the Bank of Japan (BoJ) will tighten its monetary policy further in its July monetary policy meeting.
Economists expect that the BoJ will raise interest rates further by 10 basis points (bps). The expectations for the BoJ to hike borrowing rates further are prompted by steady inflation above bank’s target of 2%. In June, annual National Consumer Price Index (CPI) rose steadily by 2.8%.
The core CPI, which excludes volatile food and energy items, accelerated to 2.2% from the former release of 2.1%. National CPI, excluding Fresh Food, grew slower by 2.6% from the estimates of 2.7% but remained higher than the former release of 2.5%.
BoJ policymakers remain worried about rising inflation due to the weak Japanese Yen. Weak yen has resulted in higher exports making them more competitive in global markets.
Meanwhile, the appeal of the US Dollar (USD) improves as a safe haven due to increasing risk aversion. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 104.50.
This week, investors will focus on the United States (US) Q2 Gross Domestic Product (GDP) and the Personal Consumption Expenditure Price Index (PCE) data for June. The economic data will provide cues about when the Federal Reserve (Fed) will begin reducing interest rates.
(The story was corrected on July 23 at 13:20 GMT to say in the first bullet that "USD/JPY weakens to 156.00 as BoJ rate-hike bets surge", not rate-cut bets.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.
The BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks

EUR/USD clings to strong gains above 1.1000 as US-China trade war deepens Premium
EUR/USD trades decisively higher on the day above 1.1000 on Wednesday as the US Dollar (USD) stays under persistent selling pressure on growing fears over a recession as a result of the US trade war with China. Later in the American session, the Federal Reserve will release the minutes of the March policy meeting.

GBP/USD holds above 1.2800 on broad USD weakness
GBP/USD stays in positive territory above 1.2800 heading into the American session on Wednesday. After China's decision to respond to the US tariffs by imposing additional 84% tariffs on US goods, the US Dollar remains under pressure and helps the pair hold its ground ahead of FOMC Minutes.

Gold extends rally to beyond $3,050 as safe-haven flows dominate markets
Gold preserves its bullish momentum and trades above $3,050 in the second half of the day. Further escalation in the trade conflict between the US and China force markets to remain risk-averse midweek, allowing the precious metal to capitalize on safe-haven flows.

XRP Price Forecast: XXRP ETF and Trump tariffs shaping XRP fundamental outlook
XRP struggles to stay afloat, with key support levels crumbling due to volatility from macroeconomic factors, including United States President Donald Trump's reciprocal tariffs kicking in on Wednesday.

Tariff rollercoaster continues as China slapped with 104% levies
The reaction in currencies has not been as predictable. The clear winners so far remain the safe-haven Japanese yen and Swiss franc, no surprises there, while the euro has also emerged as a quasi-safe-haven given its high liquid status.

The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.