USD/JPY hits three-month high
The USD/JPY has broken above its early July range centered in the low 140s. On 15 July, the pair climbed above 149 for the first time since 3 April, helped by a stronger dollar following the US CPI release. This move reflects a shift to dollar-buying after the recent phase of dollar weakness ran its course at the start of July. US President Donald Trump appeared to adopt an even more hardline stance after the 9 July deadline passed for negotiations over the so-called "reciprocal" tariffs. Against this backdrop, upward pressure has emerged on US inflation expectations, and market anticipation for Fed rate cuts has receded, prompting renewed dollar buying. Indonesia, following Vietnam, also appeared to reach an agreement with the US on 15 July. The agreed tariff rates seem to be lower than those proposed under the "reciprocal" tariffs, but the levels do not dispel concerns about further price increases in the US. This makes it unlikely that the hawkish camp within the Fed will soon support rate cuts. These factors suggest that dollar bullishness could persist in the short term.
