USD/JPY flirts with weekly low, hangs below 131.00 amid broad-based USD weakness – by hareshmenghani USDJPY Fed BOJ Recession Currencies
The US Dollar comes under some renewed selling pressure amid a fresh leg down in the US Treasury bond yields and acts as a headwind for the USD/JPY pair. Fed Chairon Tuesday acknowledged that rates might need to move higher than expected if the economy remained strong, though struck a balanced tone on inflation. This, in turn, fueled speculations about an imminent pause in the Fed's policy-tightening cycle, which, in turn, is seen dragging the US bond yields lower.
The Japanese Yen , on the other hand, draws support from expectations that high inflation could invite a more hawkish stance from the Bank of Japan later this year. Apart from this, a weaker risk tone further benefits the safe-haven JPY and exerts downward pressure on the USD/JPY pair. Theremains fragile amid worries about economic headwinds stemming from rising borrowing costs, the COVID-19 outbreak in China and fears about worsening US-China relations.
The aforementioned fundamental backdrop suggests that the path of least resistance for the USD/JPY pair is to the downside. That said, the lack of follow-through selling warrants some caution for aggressive bearish traders in the absence of any relevant market-moving economic releases. That said, speeches by influential FOMC members could provide some impetus to the greenback.
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