USD/JPY: Limited Recovery Below 145.00!
General Overview:
USD/JPY remains near 145.00 in the Asian session on Tuesday, despite a cautious market environment. The pair benefits from the recent rebound of the US Dollar and higher US Treasury yields. However, the divergence in monetary policies between the Federal Reserve (Fed) and the Bank of Japan (BoJ) continues to be a key factor that could influence the pair’s movement in the coming days.
Fundamental Factors:
Japanese Macroeconomic Data: Japan's recent GDP growth in the second quarter exceeded expectations, strengthening the case for a possible interest rate hike by the BoJ. This temporarily strengthened the Japanese Yen (JPY), contributing to the downward pressure on USD/JPY.
Monetary Policy and the Fed:
The US Dollar found support from higher US Treasury yields, but expectations of a rate cut by the Fed in September limit the upside potential. Specifically, the debate is focused on a possible 25 basis point cut, with a 60% probability, while there is still a 36% chance of a more significant 50 basis point cut, according to CME FedWatch.
USD/JPY remains near 145.00 in the Asian session on Tuesday, despite a cautious market environment. The pair benefits from the recent rebound of the US Dollar and higher US Treasury yields. However, the divergence in monetary policies between the Federal Reserve (Fed) and the Bank of Japan (BoJ) continues to be a key factor that could influence the pair’s movement in the coming days.
Fundamental Factors:
Japanese Macroeconomic Data: Japan's recent GDP growth in the second quarter exceeded expectations, strengthening the case for a possible interest rate hike by the BoJ. This temporarily strengthened the Japanese Yen (JPY), contributing to the downward pressure on USD/JPY.
Monetary Policy and the Fed:
The US Dollar found support from higher US Treasury yields, but expectations of a rate cut by the Fed in September limit the upside potential. Specifically, the debate is focused on a possible 25 basis point cut, with a 60% probability, while there is still a 36% chance of a more significant 50 basis point cut, according to CME FedWatch.
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