Policy Divergence: The Fed is expected to stay cautious on rate cuts amid solid US labor data and resilient earnings. In contrast, the BoJ is likely to emphasize downside risks to growth and inflation, especially given Japan’s domestic political instability and backlash over the US trade deal.

Political Risk in Japan: PM Ishiba is under growing pressure to resign. This creates policy uncertainty and undermines confidence in Japan’s leadership typically bearish for the yen.

Technical Trigger: A divergence in tone between BoJ Governor Ueda and Deputy Governor Uchida could catalyze another leg higher in USD/JPY.

LONG USDJPY

Jul 30 2025