- USD/JPY attracts buyers for the third straight day and draws support from a combination of factors.
- The BoJ policy uncertainty and a weak domestic economy continue to undermine the Japanese Yen.
- Reduced Fed rate cut bets lend support to the USD and contribute to the pair’s steady positive move.
The USD/JPY pair scales higher for the third straight day – also marking the fourth day of a positive move in the previous five – and climbs to over a one-week high, around the 157.25 area during the Asian session on Tuesday. Spot prices, however, remain below the 157.65-157.70 supply zone as traders seem reluctant ahead of this week's key US macro data and central bank event risks.
The US consumer inflation figures are due for release on Wednesday, which will be followed by the highly-anticipated FOMC monetary policy decision. Investors will look for cues about the likely timing when the Federal Reserve (Fed) will begin cutting interest rates. This, in turn, will play a key role in influencing the near-term US Dollar (USD) price dynamics and provide some meaningful impetus to the USD/JPY pair ahead of the Bank of Japan (BoJ) decision on Friday.
Market participants remain uncertain if the Japanese central bank will announce a reduction in the monthly government bond purchases amid a weaker economy. In fact, the Cabinet Office reported on Monday that contracted by 0.5% during the first quarter and by the 1.8% YoY rate. This, along with a stable performance around the equity markets, is seen undermining the Japanese Yen (JPY) and turning out to be a key factor acting as a tailwind for the USD/JPY pair.
The USD, on the other hand, stands tall near its highest level since May 14 touched on Monday and continues to draw support from growing acceptance that the Federal Reserve (Fed) might keep interest rates higher for longer. The expectations were fueled by the stronger-than-expected US jobs data released on Friday. This, in turn, favors the USD bulls and supports prospects for an extension of the USD/JPY pair's recent rise from the 50-day Simple Moving Average (SMA).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays in positive territory above 1.0850 after US data
EUR/USD clings to modest daily gains above 1.0850 in the second half of the day on Friday. The improving risk mood makes it difficult for the US Dollar to hold its ground after PCE inflation data, helping the pair edge higher ahead of the weekend.
GBP/USD stabilizes above 1.2850 as risk mood improves
GBP/USD maintains recovery momentum and fluctuates above 1.2850 in the American session on Friday. The positive shift seen in risk mood doesn't allow the US Dollar to preserve its strength and supports the pair.
Gold rebounds above $2,380 as US yields stretch lower
Following a quiet European session, Gold gathers bullish momentum and trades decisively higher on the day above $2,380. The benchmark 10-year US Treasury bond yield loses more than 1% on the day after US PCE inflation data, fuelling XAU/USD's upside.
Avalanche price sets for a rally following retest of key support level
Avalanche (AVAX) price bounced off the $26.34 support level to trade at $27.95 as of Friday. Growing on-chain development activity indicates a potential bullish move in the coming days.
The election, Trump's Dollar policy, and the future of the Yen
After an assassination attempt on former President Donald Trump and drop out of President Biden, Kamala Harris has been endorsed as the Democratic candidate to compete against Trump in the upcoming November US presidential election.