The minor USDJPY intraday increase is further strengthened and supported by a modest USD rise.
During Monday’s Asian session, the USDJPY pair picks up some momentum for the second straight day. And moves back above mid-139.00s.
Ahead of the important central bank event risks this week. Traders may decide against making new bets.
The disappointing domestic data, which showed that Japan’s Producer Price Index (PPI) decelerated more rapidly than anticipated. To 5.1% YoY in May from 4.9% in April, causes the Japanese Yen (JPY) to drop a little. On the opening day of a new week. the 5.9% earlier. Masazumi Wakatabe, the deputy governor of the Bank of Japan, also ruled out the likelihood of any shift in the stance of the central bank’s monetary policy later this week. This weakens the safe-haven JPY and gives the USDJPY pair. A boost coupled with a modestly slightly favorable risk tone.
On the other side, the US Dollar (USD). Which is seen as another element that contributes to the bid tone around the USDJPY pair. Builds on Friday’s modest comeback from its lowest level since May 24 and gains some follow-through traction. However, the USD increase lacks bullish conviction because investors are still unsure of the Federal Reserve’s. (Fed) intended course for rate hikes. In fact, recent dovish comments from multiple Fed officials confirmed market expectations. thinks it is more likely that the US Federal Reserve will delay hiking interest rates in June.
However, unexpected rate increases last week by the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) indicated that the battle against inflation has not yet been won. This in turn strengthens the case for more Fed policy tightening and maintains the possibility of another 25-bps lift-off in July. Therefore, this week’s release of the most recent US consumer inflation numbers on Tuesday will continue to be the market’s primary focus, which will be followed by the conclusion of the highly anticipated FOMC monetary policy meeting on Wednesday.
The BoJ is anticipated to maintain its dovish position, which weighs on the USDJPY and serves as a tailwind.
Investors will be on the lookout for new indicators of the Fed’s near-term policy outlook. Which will have a significant impact on the pricing trends in USD. In addition, the BoJ policy meeting on Thursday should help. Market players decide what direction the USDJPY pair will travel in next.
In the interim, traders may refrain from making risky bets in the lack of any pertinent. Economic data from the US that could affect the market. Which calls for some prudence before preparing for any additional intraday appreciating rise.
