**Japanese Yen and Australian Dollar Outlook: USD/JPY Climbs Amid Federal Reserve and Bank of Japan Rate Speculation**
*Based on the article “Japanese Yen and Aussie Dollar Forecasts: USD/JPY Rallies as Fed and BoJ Decision Loom” by James Hyerczyk for FXEmpire, with additional context and analysis from broader forex sources.*
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### Introduction
The Japanese Yen (JPY) and Australian Dollar (AUD) are under close scrutiny this week as major monetary policy decisions loom from the U.S. Federal Reserve and the Bank of Japan (BoJ). The USD/JPY pair has recently surged, reflecting sharp market movements as traders position ahead of these pivotal rate decisions. Broader currency markets are weighing both hawkish and dovish bets, making the coming days critical for traders, investors, and policymakers.
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### Recap: USD/JPY and AUD/USD Recently
– **USD/JPY:** Recently rallied past the 157.00 threshold, trading near multi-decade highs as of early June 2024.
– **AUD/USD:** Struggling to break higher, reflecting divergent central bank policies and diminishing risk sentiment.
The high-stakes environment is being driven by speculation about the Fed’s next move regarding rate cuts and whether the Bank of Japan will step in to support the yen through intervention or rate changes.
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### Main Factors Influencing USD/JPY
#### 1. **Federal Reserve Policy Expectations**
– The Federal Reserve is widely anticipated to leave its benchmark rate unchanged at the upcoming Federal Open Market Committee (FOMC) meeting.
– Inflation, while easing, remains above the Fed’s 2 percent target; policymakers are cautious about signaling a pivot too soon.
– Fed officials have repeatedly emphasized data dependency. Mixed economic readings, such as resilient labor markets alongside slower CPI prints, add layers of uncertainty.
– Markets have pulled back on bets for rate cuts in 2024, currently pricing in only one or two 25 basis point cuts by the end of the year.
#### 2. **Bank of Japan’s Policy Dilemma**
– The yen’s rapid depreciation has drawn attention from Japanese officials and global investors.
– The Bank of Japan has been slow to normalize policy, maintaining short-term interest rates near zero for years.
– Inflation in Japan remains above the BoJ’s 2 percent target for a record stretch, but policymakers are hesitant to end yield curve control or significantly raise rates given ongoing concerns about wage growth and the broader economy.
– Speculation about intervention is mounting. Any mention of “closely watching currency moves” or threats of actual market intervention could spur sudden volatility in USD/JPY.
#### 3. **Macro Data and Geopolitical Context**
– Mixed U.S. macroeconomic data (nonfarm payrolls, CPI, GDP) are causing volatility across all yen pairs.
– Japan’s first quarter GDP was weaker than forecast, raising concerns about domestic demand and growth prospects.
– Geopolitical risks in Asia, such as rising
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