USD/JPY Advances to Near 157.00 on BoJ’s Cautious Tightening

USD/JPY advances to near 157.00 in early European trading on Friday, extending its upward run for a fourth straight session. The pair continues to gain as the Japanese Yen remains under pressure from the Bank of Japan’s careful and slow approach to monetary tightening. Market participants are now waiting for key US labor data next week to assess the outlook for interest rates.

The Bank of Japan raised its benchmark interest rate to 0.75% from 0.50% in December. This marked the second rate increase of the year. However, investors were left underwhelmed by the cautious tone and the absence of clear guidance on future policy moves. As a result, the Yen weakened further, helping USD/JPY advances to near 157.00.

BoJ Policy Keeps Pressure on the Yen

The BoJ continues to prioritize economic stability while gradually addressing inflation risks. This slow pace contrasts sharply with other major central banks. The widening policy gap has reduced demand for the Japanese Yen and supported the US Dollar. As long as this divergence persists, USD/JPY advances to near 157.00 remains a dominant market theme.

Despite the current trend, Japanese officials remain alert to rapid currency movements. Verbal warnings from policymakers often act as a signal to the market, discouraging excessive speculation.

Intervention Risk and US Data Limit Upside

Japan’s Finance Minister, Satsuki Katayama, recently stated that authorities are monitoring foreign exchange markets with a “high sense of urgency.” She added that the government is ready to respond to excessive and one-sided moves. These comments may help cap Yen losses and slow the pace at which USD/JPY advances to near 157.00.

Meanwhile, attention is shifting to the upcoming US Nonfarm Payrolls report. The data could shape expectations for interest rate cuts later this year. Markets are currently pricing in two rate reductions, exceeding the Federal Reserve’s own projections. Political comments surrounding future Fed leadership have also introduced additional uncertainty.

Overall, USD/JPY advances to near 157.00 due to continued BoJ caution, though intervention risks and US economic data may influence near-term direction.

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