The Japanese currency was 0.1% weaker at 152.90 per dollar, reversing gains from earlier in the session.
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The euro similarly rose 0.2% to 177.50 yen , while sterling was up 0.15% to 201.70 yen .
In a widely expected move, the BOJ kept policy steady on Thursday but repeated its pledge to continue increasing borrowing costs if the economy moves in line with its projections.
“We know that the BOJ tends to be more politically sensitive. So given the Takaichi administration has just been elected, and they are now compiling another economic package, I think the BOJ will stay cautious in the very near term,” said Carol Kong, a currency strategist at Commonwealth Bank of Australia, ahead of the BOJ decision.
Some investors are betting that the policies of new Japanese Prime Minister Sanae Takaichi could complicate the BOJ rate outlook, given her preference for greater fiscal spending and loose monetary policy.
Still, the overall market mood was buoyant as investors bet on a further thaw in icy trade relations between the two nations.
Trump said a trade deal with China could be signed on Thursday, while the Chinese president similarly told his U.S. counterpart that trade negotiators from the world’s two largest economies had reached a basic consensus on a deal.
That left the dollar clinging to overnight gains after some hawkish comments from the Federal Reserve, steadying near a two-week high at 99.09 against a basket of currencies.
The euro was up 0.1% at $1.1613, having weakened 0.43% in the previous session. Sterling languished near a 5-1/2-month low and last bought $1.3202.
But Chair Jerome Powell took the punch bowl away by saying a policy divide within the central bank and a lack of data due to a federal government shutdown may put another rate cut out of reach this year.
“Clearly, the FOMC is divided on the policy outlook from here and with the government in shutdown still, I think Powell wants to approach policy more cautiously,” said CBA’s Kong.
“We still expect a cut in December, but obviously with Powell’s cautious comments, the risk is that a rate cut is delayed to 2026.”
The market odds of the Fed delivering another quarter-point cut in December have eased to around 68%, having been nearly fully priced before Wednesday’s decision.
Elsewhere, the Australian dollar rose 0.2% to $0.6588, while the New Zealand dollar similarly gained 0.2% to $0.5775.
Both Antipodean currencies were helped by a stronger yuan, which advanced to a near one-year peak against the dollar on Thursday on the Sino-U.S. trade optimism.
The onshore yuan rose to a high of 7.0955 per dollar, its strongest level since November 4, 2024.
Reporting by Rae Wee; Editing by Kim Coghill and Jamie Freed
Our Standards: The Thomson Reuters Trust Principles.
