USD/JPY recovery extends beyond 145.50 with BoJ's tightening plans into question

• The US Dollar regains lost ground as investors consider the durability of the Middle East truce.
• The BoJ's summary of opinions casts doubt on upcoming rate hikes.
• Hopes of Fed cuts in the second half of the year are weighing on the US Dollar's recovery.
  

The US Dollar firmed up on Wednesday, as the market ponders the durability of the Middle East ceasefire, while the Yen declined across the board as the BoJ's Summary of Opinions suggests that the bank might leave its monetary tightening plans in the drawer for some time.

The risk appetite seen on Tuesday following the truce between Israel and Iran has eased on Wednesday. A report by the US Intelligence stated that Tehran's plans to enrich uranium have been delayed for just some months, instead of "obliterated" as President Trump said, has left investors wondering about the durability of the ceasefire.

Beyond that, the Summary of Opinions of the last meeting by the Bank of Japan revealed that the uncertainty about the impact of Trump's tariffs caused a divergence among policymakers, which is likely to delay the bank's monetary tightening plans.

Hopes of fed cuts remain alive

BoJ policymakers showed increasing concerns about the high economic uncertainties and the upside risks from inflation and called for maintaining the accommodative policy for some more time. One member considered that the bank should keep hiking rates despite the uncertain context.

In the US, Fed Chair Jerome Powell reaffirmed his "wait and see" stance despite pressures from President Trump to cut rates. 

The weak consumer sentiment data reñeased shortly afterwards, however, cemented hopes that the bank will cut rates twice this year, which are likely to keep the US Dollar's upside attempts subdued.