The USD/JPY operates near the maximum of three weeks while the Fed keeps rates without changes in 4.50%

• The Japanese Yen continues to weaken on Wednesday, with the USD/JPY quoting about a maximum of three weeks.
• The US dollar extends its rally for fifth consecutive session, promoted by stronger GDP data and stronger labor than expected.
• The Bank of Japan is expected to keep the rates without changes at 0.50% when you finish your meeting on Thursday.

The Japanese Yen (JPY) weakens against the US dollar on Wednesday, with the USD extending its rally for the fifth consecutive day, driven by a series of American economic data stronger than expected that reinforce the resilience of the world’s largest economy. At the time of writing, the USD/JPY quotes about 148.85, rising around 0.20% in the day.

The Japanese Yen opened on Wednesday with a slightly positive tone, but was reversed sharply after reaching an intradic minimum of 147.70 during the early European session, since a new purchase interest in the US dollar raised to the torque towards a maximum of almost three weeks of 149.13, a level seen for the last time on July 16.

The Federal Reserve (Fed), as expected, maintained its reference interest rate by 4.50% on Wednesday, maintaining its current political position amid persistent concerns about inflation and resilient economic data. The decision reflects the cautious approach of the Fed while evaluating whether inflation is moving sustainably towards its 2%target. The attention is now focused on the FOMC press conference, scheduled for 18:30 GMT, with special attention to the comments of President Jerome Powell. Operators will seek clarity about the possible moment of feature cuts and how the Central Bank sees persistent price pressures derived from recent tariff measures. The last wave of tariffs has increased concerns about cost inflation, complicating the Fed policy perspective in the coming months.

The latest US economic data published earlier on Wednesday painted a panorama of a solid economic momentum. The preliminary estimate of the Gross Domestic Product (GDP) of the second quarter revealed a solid expansion of 3.0% after a weak start of the year, indicating a remarkable rebound in general economic activity. Meanwhile, the underlying PCE price index remained high and above the objective of the Central Bank of 2.0%, reinforcing the case for a patient policy position. In the work front, the ADP employment change report revealed a stronger gain than expected of 104,000 jobs in the private sector in July, marking a remarkable rebound from the 33,000 reviewed down June, suggesting that the labor market remains robust.

Meanwhile, the attention is also directed to the Bank of Japan (BOJ), which concludes its two -day monetary policy meeting on Thursday. The Central Bank is expected to maintain its reference interest rate without changes in 0.50%, marking a fourth consecutive retention since it came out of negative interest rates in January. At that time, the BOJ raised its short -term policy rate of 0.25% to 0.50% – its first rise since 2007 – and has maintained that level through May and June meetings.

Although a change in rates is not anticipated this time, the focus will be in the Boj’s perspective report and the future guide, particularly in regards to inflation expectations and the possible moment of future increases in fees. Economists anticipate that the BOJ could adopt a slightly more optimistic tone, especially after the recent commercial agreement between the US and Japan, which has relieved some uncertainties related to tariffs.

The governor of the Boj, Kazuo Ueda, has repeatedly declared that the Central Bank will remain flexible and will base its decisions on the data that arrive. It has made it clear that any future rates will depend on whether inflation remains close to the 2% target for a sustained period. While recent numbers show that underlying and food prices remain high, the BOJ wants to see a stronger salary growth and stable internal demand before advancing with rates.