BoJ raises inflation forecast, yen weakens past 150

[Ben Graham]

The yen continues to lose ground against the US dollar. In the North American session, USD/JPY is trading at 150.51, up 0.69% on the day. This is the first time that the yen has weakened past 150 since March 31. The US dollar has strengthened this week against the majors and is up about 2% against the yen.

BoJ holds rates, raises inflation forecast

The Bank of Japan maintained its policy settings at today's rate meeting. The vote to hold rates at 0.5% which was unanimous, was widely expected. The central bank revised its inflation forecast and provided a less pessimistic outlook on Japan's economy than in the previous growth forecast in April.

The BoJ revised its core CPI forecast to 2.7% from 2.2% in April. The upward revision in the inflation forecast has raised expectations of a resumption in interest rate hikes before the end of the year.

In his follow-up press conference, Governor Ueda said that "underlying inflation still remains short of our 2% target, but is expected to rise moderately". Ueda added that the US-Japan trade deal reduced uncertainty and increased the likelihood that inflation would sustainably hit the 2% target. Still, Ueda sounded cautious, saying that uncertainty remains despite the progress of the trade deal.

Fed stays on the sidelines

The Federal Reserve maintained rates at the Wednesday rate meeting, as expected. The Fed continued its wait-and-see stance as it held rates for a fifth straight meeting.

In his press conference, Fed Chair Powell said that the effects of tariffs on inflation "remain to be seen". Powell poured cold water on hopes that a September cut is coming, stating "we have made no decisions about September".

USD/JPY Technical

• USD/JPY has pushed above resistance at 150.12. The next resistance lines are 150.69 and 151.85
• 148.96 and 148.39 are the next support levels

USDJPY 1-Day Chart, July 31, 2025

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