Yen Gains Amid BOJ's Inflation Forecast Lift; U.S. Dollar Shows Resilience

The yen experienced a minor bump on Thursday after the Bank of Japan (BOJ) raised its inflation forecasts while maintaining interest rates, fostering cautious optimism about Japan's economic landscape. At the BOJ's two-day policy meeting, interest rates remained steady at 0.5%, with an upward revision of the fiscal year's core inflation forecast to 2.7%, up from 2.2%.

The yen showed volatility post-decision but later climbed higher, standing at 148.78 per dollar. Khoon Goh, ANZ's head of Asia research, stated there are strong reasons for a rate hike. With a recent U.S. deal cutting uncertainty, all eyes are on BOJ Governor Kazuo Ueda's press conference for insights on a potential rate increase in October.

Meanwhile, the U.S. dollar edged towards a two-month high after Federal Reserve Chair Jerome Powell's cautious stance on rate modifications and the easing of trade-related uncertainties bolstered the currency. The dollar index marked a 3.2% monthly gain, supported by persistent hawkish Fed policies and trade negotiations progress.

(With inputs from agencies.)