USDJPY pair edged higher during Wednesday’s Asian session.
Although lacking bullish conviction, the USDJPY pair edged higher during Wednesday’s Asian session. It is currently trading at the 139.00 level or the top of a well-known range. That it has been in for the previous week or so.
The USD is stuck near a 15-month low, which prevents any further increases.
The safe-haven Japanese Yen (JPY) is undercut by the underlying bullish attitude around the global equities markets. Which ends up being a major factor supporting the USDJPY pair. Additionally, the recent less hawkish comments made by Bank of Japan (BOJ) Governor Kazuo Ueda impact on the situation. on the JPY and continue to be in favor of the pair’s slight intraday increase.
After the G20 summit in India. Ueda highlighted that there was still some way to go before the aim of 2% inflation could be sustained. In response to a query about whether the BoJ saw the need to modify the YCC. At its meeting in July, Ueda stated that our narrative on monetary policy won’t change unless. Our assumption on the necessity to stably attain 2% target changes.
However, given the muted US Dollar (USD) price action. Which has thus far struggled to gain any significant traction from its lowest level since April 2022 reached on Tuesday. The upside for the USDJPY pair remains constrained. The likelihood has been discounted by the markets. of any more rate increases by the Federal Reserve (Fed) following the anticipated July 25 bps lift-off.
The JPY is under pressure due to a number of factors, which somewhat supports the pair.
The US CPI report, which was released last week and indicated a further reduction in consumer inflation. Confirmed the expectations and should allow the US central bank to moderate its aggressive position. This has been a major contributing cause to the recent corrective decrease in US Treasury bond yields. Which has put the USD bulls on guard and may have limited the USDJPY pair’s upward potential.
Given the aforementioned underlying context, it is smart to hold off on concluding that the recent significant decline from the YTD peak – levels just over the 145.00 psychological threshold – has peaked before looking for strong follow-through purchasing. Trade now focuses on the US. Building Permits and Housing Starts data from the housing industry will provide some momentum later on in the North American session.
