Yen Forecast: Will USDJPY Stall as BOJ Shifts Outlook?

Yen Recovers as Fed Holds Rates Steady

The Japanese yen rebounded on Thursday after hitting its weakest level since early April. The move followed the Fed interest rate decision, where policymakers chose to keep rates unchanged. However, two Trump-appointed members dissented, pushing for a 25 basis point rate cut.

This divergence highlights growing concerns over slowing inflation and economic uncertainty in the U.S.

U.S.–South Korea Trade Deal Finalized at 15% Tariff

Donald Trump announced a “full and complete” U.S.–South Korea trade agreement, placing a uniform 15% tariff on South Korean exports, aligning them with existing rates on Japan and the European Union.

Trump also confirmed that India will face a 25% tariff starting August 1, along with additional penalties for continuing defense and energy purchases from Russia. These actions are part of his broader effort to combat what he describes as unfair trade policies.

U.S. GDP Surprises to the Upside in Q2

The U.S. economy expanded more than expected in Q2 2025. According to the Commerce Department, the GDP boost came from stronger consumer demand and a rebound in the trade balance.

This upbeat data adds complexity to the Fed's policy stance and raises questions about how long rates will stay elevated.

BOJ Rate Hike Outlook: Markets Watching Policy Shift

While the Bank of Japan (BOJ) is widely expected to keep interest rates on hold at its next policy meeting, traders are increasingly pricing in the risk of a rate hike later this year.

Analysts anticipate the BOJ could raise its inflation forecast and express a more upbeat view of the domestic economy. Still, BOJ Deputy Governor Uchida warned that new global tariffs might impact business confidence and capital investment plans.

USDJPY Technical Analysis: Resistance Near 148.5

The USDJPY pair recently found support around its 200-day simple moving average (SMA). Despite the bounce, the bearish trend remains in play.

The yen’s recovery highlights the growing divergence between U.S. and Japanese monetary policies. While the Fed has opted to pause rate hikes, expectations are building around a potential shift in the BOJ’s rate outlook, especially if inflation trends remain elevated.

Meanwhile, ongoing trade developments such as new tariffs on South Korea and India—continue to add volatility to major currency pairs like USDJPY.

For traders navigating these fast-changing markets, tools and insights from trusted platforms can be essential. Ultima Markets offers access to real-time charts, macroeconomic calendars, and technical analysis to help traders stay ahead of global policy shifts and market reactions.