The Japanese yen rose in Asian markets on Wednesday against a basket of major and minor currencies, continuing its recovery for the second consecutive day from a two-week low versus the US dollar. This was driven by buying activity at lower levels and a pause in the dollar's recent rally in the foreign exchange market.

The Bank of Japans policy meeting begins today, with decisions expected on Thursday. The bank is widely expected to keep interest rates unchanged for the fourth consecutive meeting at 0.50%, the highest level since 2008 when the global financial crisis began.

Price Overview

USD/JPY today: The dollar declined by 0.45% against the yen to 147.85, down from the opening price of 148.45. The pair recorded a session high at 148.53.

On Tuesday, the yen gained less than 0.1% against the dollar at settlement its first gain in four days after earlier hitting a two-week low at 148.81.

US Dollar

The US Dollar Index fell 0.2% on Wednesday, pulling back from a five-week high of 99.14 points, reflecting a pause in the greenbacks climb against a basket of global currencies.

In addition to profit-taking, the dollar declined as investors refrained from building new long positions ahead of the US Federal Reserves policy decision, which may offer strong signals reinforcing the likelihood of a rate cut in September.

The Fed concludes its critical monetary policy meeting later today, with broad expectations of holding interest rates steady for the fifth straight meeting amid ongoing assessments of appropriate policy for the worlds largest economy.

Bank of Japan

The Bank of Japans policy meeting begins today, with decisions due Thursday. Rates are expected to remain unchanged at 0.50% for the fourth consecutive meeting still the highest level since the 2008 financial crisis.

BOJ policymakers are also expected to discuss the potential impact of Japans recent trade agreement with the US on the countrys export-driven economy. This may become a key factor in determining the timing of the next rate hike.

With monetary policy expected to stay steady, markets will focus on BOJ Governor Kazuo Uedas post-meeting comments for any hints on whether global economic pessimism might influence the pace of Japans future rate hikes.

Yen Outlook

At Economies.com Today, we expect the yen to remain in positive territory against the US dollar particularly if the Federal Reserve responds to Trumps criticism and adopts a more dovish approach.