BoJ minutes indicate more rate hikes coming, yen dips

[Redator]

The Japanese yen is in negative territory on Tuesday. In the European session, USD/JPY is trading at 147.74, up 0.45% on the day.

BoJ minutes: BoJ will hike as inflation, growth increase

The Bank of Japan minutes from the June policy meeting were somewhat dovish, but the yen has still headed lower today.

The minutes indicated that most BoJ members favored keeping interest rates unchanged, since there were downside risks to Japan's economy due to US tariffs. Still, Governor Ueda and most members support further rate hikes down the road, provided that inflation and growth continue to increase in line with the BoJ projections.

This stance was reiterated at last week's meeting, with the BoJ signalling that it planned further rate hikes if inflation and growth increased. At the meeting, the BoJ revised up its inflation forecasts for this fiscal year to 2.7%, from 2.2% in the April forecast. The central bank also raised its growth forecast by 0.1% from the April forecast .

The June meeting took place prior to the US-Japan trade agreement, which the BoJ said has reduced trade uncertainty. The trade deal should pave the way for another rate hike before the end of the year. The BoJ reacted positively to the agreement, which applies 15% tariffs on most Japanese imports to the US.

US ISM Services PMI expected to improve

The ISM services PMI is expected to accelerate to 51.5 in July, compared to 50.8 in June. The services sector is back in expansion territory after a rare contraction (49.9) in May. Services purchase managers pointed to the uncertainty over tariff impacts as their number one concern.

On Friday, ISM Manufacturing PMI slipped to 48.0 for July, down from 49.5 in June. This marked the fifth consecutive contraction for manufacturing.

USD/JPY Technical

• USD/JPY has pushed above resistance at 1.4720 and is testing resistance at 147.42. Above, there is resistance at 147.81
• 1.4681 and 1.4659 are the next support levels

USDJPY 4-Hour Chart, Aug. 4, 2025

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