The pair climbs 0.12% to 159.45 as traders await clarity on the Bank of Japan’s June 16 policy decision amid inflation risks.
The USD/JPY pair edged 0.12% higher to 159.45 in early European trading, driven by uncertainty over the Bank of Japan’s potential interest rate hike at its June 16 meeting. The yen underperformed against major currencies, particularly the British pound, as markets weighed inflation risks and economic resilience.
Recent BoJ commentary highlighted divisions among policymakers, with some warning of persistent inflation pressures while others questioned the economy’s ability to withstand tighter monetary conditions. Former BoJ Deputy Governor Masazumi Wakatabe emphasized the need to assess economic durability under higher rates, adding to market caution.
Higher oil prices, fueled by Middle East tensions, have further clouded Japan’s economic outlook, complicating the BoJ’s decision. The US dollar’s modest strength also supported the pair’s upward move.