The US Dollar to Yen exchange rate is trading around 163.85 after reaching a July high near 163.98, its strongest level since 1986. The pair is up around 0.75% this month and has risen from roughly 147 in August 2025.

Scotiabank says the Yen is showing tentative signs of stabilisation, although it continues to underperform most other G10 currencies.

The latest pause has been driven more by softness in the broader US Dollar than by Japanese official commentary.

Finance Minister Katayama has continued to warn of “bold action” to counter excessive currency moves, but Scotiabank notes that intervention threats have produced little meaningful reaction in the Yen.

Attention now turns to the Bank of Japan’s July 31 meeting. Markets are pricing almost no chance of an immediate rate move and only around 10 basis points of tightening by September.

Scotiabank believes this leaves scope for a hawkish surprise if policymakers signal that the tightening cycle could proceed faster than investors currently expect.

According to the bank, “a hawkish hold next week could deliver an important surprise and deliver fundamentally-driven yen strength.”

Until then, Scotiabank sees little meaningful technical resistance for USD/JPY as the pair continues to trade at fresh multi-decade highs.

Exchange Rates UK Research

Our currency coverage draws on live market data, official economic releases and published bank research.