USD/JPY gains traction above 158.00 on Trump Greenland deal optimism, eyes on BoJ meeting

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The USD/JPY pair trades in positive territory around 158.30 during the early Asian session on Thursday. The US Dollar (USD) strengthens against the Japanese Yen (JPY) amid hopes for a solution in US President Donald Trump’s ambitions for Greenland that would avoid tariffs.

USD/JPY gains ground to near 158.30 in Thursday’s early Asian session.
Trump said he reached a framework deal on Greenland, supporting the US Dollar.
The BoJ is widely expected to maintain its policy rate at its January meeting on Friday.

Trump said late Wednesday that the United States and the North Atlantic Treaty Organization (NATO) had "formed the framework of a future deal with respect to Greenland" and that he will not be imposing tariffs scheduled to go into effect in February, per Reuters. The US President did not detail the parameters of the “framework,” and it was unclear what the agreement entails.

However, optimism after Trump stepped back from threats to impose tariffs on eight European countries could lift the Greenback against the JPY in the near term.

The final reading of US Gross Domestic Product (GDP) for the third quarter (Q3) will be published later on Thursday, along with the weekly Initial Jobless Claims and Personal Consumption Expenditures (PCE) Price Index data. If the reports show stronger-than-expected outcomes, this could provide some support to the USD against the JPY.

The Bank of Japan (BoJ) is widely anticipated to hold its policy rate steady at around 0.75% at the conclusion of its two-day meeting on Friday. The Japanese central bank last raised its rate to the highest in three decades in December 2025.

Traders await additional clues from Governor Kazuo Ueda's press conference regarding the expected timing of the BoJ's next rate hike. Any hawkish remarks from Japanese policymakers could boost the JPY and create a headwind for the pair.

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.