"USDJPY is currently trading around the 155.5 level. While this remains a relatively high price, the pair has already undergone a correction from its previous peak near 159.5. At one point, USDJPY slid back toward the 152 area before rebounding to its current level. The sharp and rapid movements seen in USDJPY recently indicate that the market is no longer reflecting only the economic divergence between the United States and Japan,"
"In the United States, the Federal Reserve is maintaining its policy rate within the 3.50%-3.75% range following the rate-cut cycle in 2025, while continuing to adopt a cautious stance toward inflation. Although the Fed is no longer in an aggressive tightening phase, the current level of U.S. interest rates remains high by long-term historical standards and is still noticeably higher than those of many other developed economies."
"On the other hand, the Bank of Japan has officially exited its zero-interest-rate policy, with the policy rate currently at around 0.75%, the highest level in nearly three decades. As USDJPY approached its 52-week highs, purely economic factors began to collide with policy constraints. A prolonged period of yen weakness not only affects the exchange rate itself but also has direct implications for Japan's domestic economy through the import channel."
USDJPY trades near 155.5 after correcting from a peak near 159.5 and briefly sliding to the 152 area before rebounding. Recent sharp moves reflect economic divergence between the United States and Japan plus increased pricing of policy and volatility risks for the yen. The Federal Reserve maintains policy rates at 3.50%–3.75% after the 2025 rate-cut cycle, leaving U.S. rates high by historical standards relative to other developed economies. The U.S. dollar weakened to near 95.2 on the Dollar Index. The Bank of Japan has exited zero rates with policy near 0.75%, raising import-driven cost pressures in Japan.
Read at London Business News | Londonlovesbusiness.com
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