• USD/JPY claws back slight early losses as the JPY faces pressure after the BoJ’s interest rate decision.
• The BoJ has kept interest rates steady at 0.75%, as expected.
• On Wednesday, the Fed guided that it won’t cut interest rates until inflation starts cooling down.

The Japanese Yen (JPY) faces selling pressure against the US Dollar (USD) after the Bank of Japan (BoJ) decided to leave interest rates unchanged at 0.75%. Still, the USD/JPY pair is 0.14% down to near 159.70 as the US Dollar is underperforming its peers.

The BoJ was expected to hold interest rates steady as surging oil prices due to conflicts in the Middle East, which involve the United States (US), Israel, and Iran have raised concerns over Japan’s economic outlook.

This is the second straight meeting when the BoJ has left interest rates steady. Meanwhile, investors await BoJ Governor Kazuo Ueda’s press conference for fresh cues on the monetary policy outlook.

On Tuesday, BoJ’s Ueda expressed confidence that prices and wages will continue to accelerate ahead of the monetary policy announcement on Thursday. “Expect underlying inflation to converge toward our target in latter half of fiscal 2026 through fiscal 2027,” Ueda said.

Meanwhile, the US Dollar trades slightly lower after a sharp upside move on Wednesday, following the Federal Reserve’s (Fed) monetary policy outcome, in which the US central bank left interest rates unchanged in the range of 3.50%-3.75%, as expected, and guided that monetary policy adjustments will be appropriate only if inflation starts showing signs of easing.