The USD/JPY pair reached a new daily high in the last hour, reversing a decline in the Asian session. Spot prices have held steady in the 147.25–147.20 range, stopping this week’s corrective decline from the highest level since November 2022.

Lower-than-expected Q2 GDP growth has caused the Japanese Yen (JPY) to decline, which has caused dip-buying in the USD/JPY pair. The third-largest economy in the world grew by 4.8% annually between April and June, underscoring both the fragility of the Japanese economy and the Bank of Japan’s ultra-loose monetary policy.

The JPY’s reputation as a safe-haven currency is weakened, supporting the USD/JPY pair and indicating calm in equity markets. Rumors of government intervention in foreign exchange markets may prevent further losses. BoJ board member Junko Nakagawa believes stable FX movements align with economic and financial fundamentals. A slight USD decline limits major gains.

The Federal Reserve’s acceptance of higher rates and a 25 basis point lift-off in 2023, a marked departure from the BoJ’s dovish position, has kept the USD’s attitude optimistic. This means that the USD/JPY’s path of least resistance is upward, and any corrective dip should be viewed as a buying opportunity.

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