JPY Monthly - June 2025

USD/JPY: Will tariff negotiations make progress?

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Summary

The phase of dollar weakness and yen strength has levelled off as concerns over US tariff policy have eased and expectations for a BOJ rate hike have receded. June is likely to be a turning point for tariff negotiations given the temporary suspension of US President Donald Trump's "reciprocal" tariffs ends on 9 July. Based on recent comments from Trump, we expect continued moves to buy back the dollar due to easing tensions, meaning the May high of above 148.50 could be tested. Meanwhile, we expect the BOJ to decide at its June meeting to continue reducing JGB purchases at the current pace into next fiscal year. This could be seen as inconsistent with the recent fading of rate hike expectations and may be interpreted as a yen buying factor.

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