FX.co ★ Japanese Yen Rallies to 3-Week High

The Japanese yen appreciated to approximately 146.5 per dollar on Thursday, reaching its highest value in three weeks. This development is attributed to increased anticipation of Federal Reserve interest rate reductions this year, which exerted downward pressure on the US dollar. Recent US inflation data indicated that President Donald Trump's tariffs are not exacerbating price pressures, and indications of a cooling labor market have further reinforced this dovish outlook. US Treasury Secretary Scott Bessent also contributed to the sentiment by advocating for multiple rate cuts, hinting that the Federal Reserve could initiate these adjustments with a significant 50-basis-point reduction. Domestically, the Bank of Japan is experiencing pressure to reconsider an inflation measure linked to domestic demand and wage growth, which has constrained further tightening of monetary policy. Bank of Japan Governor Kazuo Ueda has maintained a cautious approach, emphasizing that "underlying inflation" remains beneath the bank's target of 2%.