Japanese Yen Strengthens Against Weakening USD, USD/JPY Nears 145.00

Japanese Yen Maintains Strength, Pressures USD/JPY Toward 145.00

June 25, 2025 – Forex News | Tredu.com

The Japanese Yen (JPY) extends its overnight gains and drags the USD/JPY currency pair near the 145.00 psychological level early Tuesday, as the pair continues its downward slide during European pre-market hours.

BoJ-Fed Divergence Boosts JPY

The primary driver behind this move is the widening policy divergence between the Bank of Japan (BoJ) and the US Federal Reserve (Fed). Markets are increasingly confident that the BoJ will raise interest rates for the second consecutive meeting in July, amid persistent inflation pressure in Japan.

In contrast, expectations are building that the Fed may begin cutting rates as early as July, following dovish signals from Fed officials and softer US macro data. This divergence places additional downward pressure on the USD, favoring the lower-yielding JPY.

Japanese Trade Diplomacy in Focus

Japan’s Economy Minister Ryosei Akazawa is set to visit the United States again on June 26, marking his seventh visit as Tokyo seeks to finalize a bilateral trade deal before the July 9 deadline for new US reciprocal tariffs. The trip is viewed as JPY-positive, reflecting strong diplomatic engagement.

Geopolitical Calm Adds No Resistance to JPY Gains

Even though tensions in the Middle East have eased following the Israel-Iran ceasefire, the JPY remains largely unaffected and continues to draw strength from macroeconomic fundamentals rather than geopolitical safe-haven demand.

Traders Eye Powell’s Testimony

With Fed Chair Jerome Powell’s congressional testimony on the horizon, traders may avoid placing aggressive directional bets until more clues emerge regarding US monetary policy.

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