Original Author: Investing.com via Mitrade
Title: USD/JPY Holds Near ¥150 Amidst Dovish Fed Expectations and Mixed Japanese Data
The USD/JPY currency pair remained near the psychologically significant 150 level on Thursday, October 24, 2025. Seen trading slightly weaker on the day, this comes as growing expectations mount that the U.S. Federal Reserve is turning more dovish on its monetary policy stance, while Japanese economic data released earlier in the session offered mixed signals on the trajectory of Japan’s economy.
Market participants are closely monitoring both the Federal Reserve’s upcoming decisions and the Bank of Japan’s policy stance ahead of next week’s pivotal central bank meetings in the U.S. and Japan. The juxtaposition of these two policy outlooks is increasingly critical in shaping movements in the USD/JPY exchange rate, especially as investors weigh prospects of a Fed pause against the potential for further adjustments by the BOJ.
Key Points from October 24 Movement:
– USD/JPY traded slightly weaker, down 0.1%, hovering around the 149.80 to 149.90 range.
– The pair continues to find support above 149.50, maintaining proximity to the 150 threshold.
– Anticipation around the upcoming FOMC and Bank of Japan meetings drives short-term forex sentiment.
– Japanese economic reports delivered a mixed outlook, adding uncertainty for yen traders.
– U.S. Treasury yields have steadied, further contributing to a temporary stall in the dollar’s rally.
Shift in Fed Sentiment Weighs on the Dollar
A significant factor contributing to USD/JPY’s marginal weakness was the shift in expectations regarding the Federal Reserve’s monetary policy. Investors are increasingly convinced that the Fed could be reaching the end of its interest rate hiking cycle, with signs of lifting pressure on inflation and real economic indicators softening.
Recent U.S. data indicates that inflation appears to be moderating, especially in core readings. Fed officials have also acknowledged the evolving risks to economic growth posed by persistently high borrowing costs. Markets now forecast a higher likelihood that the Fed will leave interest rates unchanged during its policy meeting at the end of the month.
Federal Open Market Committee (FOMC) Outlook:
– The Fed is expected to hold interest rates steady in November.
– The December meeting is priced at only a 20-30% chance of another rate hike.
– Economic data including core PCE and labor market reports will be pivotal in guiding any further moves.
– U.S. 10-year Treasury yields have eased from recent highs near 5%, supporting a moderation in dollar strength.
– Fed Chair Jerome Powell’s recent remarks emphasized a cautious and data-dependent approach.
The potential cessation of the Fed’s aggressive rate-hiking path removes a key pillar of support for the U.S. dollar. This softening of monetary tightening sentiment has directly contributed to a temporary pause in the multi-month rally in USD/JPY.
Japanese Data Delivers Mixed Signals
Meanwhile, newly released economic indicators from Japan painted a complex picture of the nation’s economic trajectory. Market watchers are paying close attention to see whether the Bank of Japan will begin to lean further away from its ultra-loose monetary policy, which has been a longstanding contributor to yen weakness.
Key Data Released on October 24:
– Japan’s Jibun Bank Manufacturing PMI for October came in at 48.5, down from 48.7 in September and well below the 50 mark, which separates contraction from expansion.
– In contrast, the Jibun Bank Services PMI improved slightly to 51.1 from 51.0, maintaining an expansionary reading.
– The Composite PMI, which combines both manufacturing and services data, edged up slightly to 49.9, but remains below the expansion threshold.
Implications of Japanese Economic Data:
– The manufacturing sector remains under pressure, reflecting sluggish export demand and weaker global conditions.
– Services activity continues to grow, albeit at a slow pace, suggesting domestic demand is
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