The Japanese yen extends losses against the dollar amid Fed-BOJ policy divergence and Japan’s economic struggles.
USD/JPY climbed further toward its 2024 high as the yen faces sustained pressure from shifting monetary policy expectations. The Federal Reserve’s hawkish stance on inflation contrasts with the Bank of Japan’s accommodative approach, favoring dollar strength.
Japan’s finance ministry intervened in late April to support the yen, but the move failed to reverse the trend. Analysts noted poor timing and insufficient market liquidity undermined the signal, leaving traders unimpressed.
Geopolitical tensions in the Middle East and Japan’s fiscal challenges add to the yen’s woes. Until the Strait of Hormuz reopens or policy shifts materialize, downside risks for the yen remain elevated.