The Japanese hit a peak on Thursday, touching an eight week high versus the greenback after BOJ backed the ongoing interest rate hikes.

While the yen strengthened, the (BoE) lowered interest rates. Although the move was anticipated, the bank also projected higher inflation and slower economic growth.

Additionally, two officials pushed for a more significant rate cut, leading to a 0.8% decline in the pound to $1.24065.

The BoE’s decision led money markets to price in 67 basis points of further cuts this year. Despite the rate reduction, analysts believe the pound’s decline may be limited due to the UK’s service-driven economy. Meanwhile, the dollar index rose to 107.92, hovering near last week’s low as investors grew optimistic about avoiding a global trade war.

The dollar index has fallen 2% from its two-year high of 110.17 on January 13, driven in part by recent tariff actions from the Trump administration.

President Trump paused tariffs on Mexico and Canada while imposing a 10% levy on Chinese imports. Markets are also awaiting Friday’s US payroll data for further signals on monetary policy.

The yen strengthened to 151.81 per dollar, its highest since December 12, after BOJ's Naoki Tamura advocated for rate hikes to address rising price risks. It later eased to 151.85, as the market now expects a 0.25% BOJ rate hike by September following Tamura’s hawkish remarks.