The USD/JPY falls on the opening day of a new week, erasing some of Friday's significant gains to the 142.00 region, or a nearly two-week high. Spot prices have been on the defensive throughout the Asian session, trading slightly around the mid-141.00s, down roughly 0.30% on the day. The Japanese Yen (JPY) has attracted some buyers …
The USD/JPY falls on the opening day of a new week, erasing some of Friday’s significant gains to the 142.00 region, or a nearly two-week high. Spot prices have been on the defensive throughout the Asian session, trading slightly around the mid-141.00s, down roughly 0.30% on the day.
The Japanese Yen (JPY) has attracted some buyers in response to comments by Japan’s top currency ambassador Masato Kanda, who stated that recent inflation and salary increases have exceeded expectations. Kanda told reporters on Monday that the data provided so far supports the Bank of Japan’s (BoJ) inflation predictions being upgraded. This raises the prospect that the Bank of Japan would change its Yield Curve Control (YCC) policy later this week, which, together with a weaker risk tone, will support the safe-haven JPY while acting as a headwind for the USD/JPY pair.
Aside from that, a little drop in the value of the US dollar (USD) is regarded as another factor weighing on the pair, albeit the downside is limited ahead of this week’s important central bank event concerns. The Federal Reserve (Fed) is likely to raise interest rates by 25 basis points (bps) during a two-day policy meeting on Wednesday. Furthermore, questions about the Fed’s commitment to a more dovish policy stance help the buck maintain its recovery gains from the lowest level since April 2022 reached last week, and should strengthen the USD/JPY pair.
The highly anticipated FOMC decision will be followed on Friday by the next BoJ monetary policy statement, which will be crucial in deciding the major’s near-term course. Meanwhile, traders on Monday will draw cues from the release of the flash US PMI numbers, which are scheduled for later in the early North American session. The statistics will provide new information into the US economy’s health, which should have an impact on the USD. Aside from that, the broader risk mood may also contribute to the creation of short-term chances in the USD/JPY pair.
Key notes:
The USD/JPY pair edges lower on the first day of the week, eroding Friday’s strong gains and trading near the mid-141.00s with a 0.30% decline for the day.
The Japanese Yen (JPY) attracts buyers due to comments by Japan’s top currency diplomat, suggesting that inflation and wage rises are exceeding expectations and could lead to an upgrade in the Bank of Japan’s (BoJ) inflation forecasts. This fuel hopes of a possible adjustment in the BoJ’s Yield Curve Control (YCC) policy, supporting the JPY and acting as a headwind for USD/JPY.
A slight downtick in the US Dollar (USD) also weighs on the pair, but the downside is limited ahead of key central bank events. The Federal Reserve (Fed) is expected to announce a 25-bps interest rate hike this week, while doubts about a more dovish policy stance assist the USD’s recovery gains and provide support for USD/JPY. The BoJ’s monetary policy update on Friday will also impact the pair’s trajectory.
Risk disclaimer:
Please note that this article does not offer any instructions or suggestions regarding investment decisions. It is important for you to conduct your own research or seek professional advice from a qualified professional before conducting an investment decision.
