The Japanese yen rose in the Asian market on Wednesday against a basket of major and minor currencies, extending its gains for the third consecutive day against the U.S. dollar, recording the highest level in two months, supported by the weak performance of the U.S. currency ahead of an expected Federal Reserve decision to cut interest rates by about 25 basis points.

The important monetary policy meeting of the Bank of Japan begins tomorrow, Thursday, with decisions due on Friday, where interest rates are expected to remain unchanged for the fifth consecutive meeting.

Price Overview

Japanese yen exchange rate today: the dollar fell against the yen by about 0.2% to (146.21), the lowest since July 24, from todays opening price of (146.48), with a high of (146.55).

The yen ended Tuesdays session up by 0.6% against the dollar, marking its second daily gain in a row, due to renewed pressure from the U.S. administration under Donald Trump on the Federal Reserve.

U.S. Dollar

The dollar index fell on Wednesday by less than 0.1%, extending its losses for the third consecutive session, close to touching a ten-week low at 96.56 points, reflecting the continued weakness of the U.S. currency against a basket of global currencies.

This weak performance comes as Trump renewed pressure on Federal Reserve policymakers to implement deeper interest rate cuts. The U.S. central bank is expected to announce later today a benchmark rate cut of about 25 basis points.

In a social media post on Monday, Donald Trump urged Federal Reserve Chairman Jerome Powell to implement a larger cut in the benchmark interest rate, citing risks facing the U.S. housing market.

Bank of Japan

The Bank of Japan meets tomorrow, Thursday, to discuss the monetary policy suitable for the developments of the worlds fourth-largest economy, with decisions to be announced on Friday.

Market pricing of the probability that the bank will raise Japanese interest rates by a quarter point at this meeting is currently around 20%.

With expectations steady for keeping Japanese interest rates unchanged for the fifth consecutive meeting, focus will similarly be on Governor Kazuo Uedas comments regarding the future policy path.

Outlook for the Yen

At Economies.com, we expect the Japanese yen to continue moving in the positive zone against the U.S. dollar, especially if the results of the Federal Reserve meeting come in less aggressive than markets are currently anticipating.