USD/JPY Dips Below 150 as Weak US Jobs Data Fuels Fed Rate Cut Speculation

On Friday, August 1, 2025, the USD/JPY currency pair fell below the key 150.00 level after a weaker-than-anticipated US July labor report. The pair had briefly surpassed 150.00 earlier in the day, a threshold not crossed since early April, driven by divergent signals from the Federal Reserve (Fed) and the Bank of Japan (BoJ).

The disappointing US jobs data reignited expectations for a dovish Fed policy, with markets now anticipating potential interest rate cuts as soon as next month. The Fed’s recent meeting, which was seen as less dovish than expected, had initially supported the US Dollar’s strength. In contrast, the BoJ’s less hawkish tone dampened prospects for near-term rate hikes in Japan, contributing to USD/JPY’s earlier rise. However, the soft labor report shifted the tide, weighing on the currency pair.

Looking forward, USD/JPY may face further downward pressure in the coming months if expectations for a BoJ rate hike around year-end persist. This scenario depends heavily on Japan’s economic performance amid global trade challenges, particularly following US President Donald Trump’s recent tariff announcements, which could disrupt Japan’s economic stability and influence BoJ policy.

Although the US Dollar maintained a strong tone through much of July, the latest jobs data exposed its susceptibility to weakness. If dovish Fed expectations solidify, the USD/JPY’s retreat below 150 underscores shifting market dynamics as investors reassess US labor market strength and global economic uncertainties.