The USD/JPY pair continues to slide in early Asian trading, hovering around 146.05. The US Dollar is weakening due to rising expectations of Fed rate cuts in September, putting pressure on the pair. On the other hand, the hawkish stance of the Bank of Japan (BoJ) is supporting the Japanese Yen against the USD.
Traders are closely watching Japan’s National Consumer Price Index (CPI) for July and Fed Chair Jerome Powell’s speech on Friday for further direction. The USD Index (DXY) is at a multi-day low, around 101.85, signaling a bearish trend for USD/JPY. Market sentiment points towards a 77% chance of a 25 basis points rate cut in September, with expectations of a 200 basis points reduction over the next year.
Japan’s second-quarter GDP data and the possibility of a rate hike by the BoJ are boosting the JPY. The Japanese economy is expected to recover gradually, supported by improving wages and income. The government plans to work closely with the BoJ to implement flexible monetary policies in the future.
Japanese Yen FAQs
- Value determined by Japanese economy performance
- BoJ’s direct currency control impacts Yen value
- Policy divergence favors USD against JPY
- Yen considered a safe-haven investment
Overall, the USD/JPY pair is under pressure from a weakening USD and expectations of Fed rate cuts, while the JPY is supported by positive economic indicators and potential rate hikes by the BoJ. Traders should monitor key economic data and central bank policies for trading opportunities in the USD/JPY pair.