USD/JPY plummets to fresh multi-week low, closer to mid-140.00s amid broad-based USD weakness – by hareshmenghani USDJPY Fed Bonds Inflation Currencies
er some selling pressure for the fourth successive day on Tuesday. The downward trajectory drags spot prices to over a three-week low, closer to mid-140.00s during the Asian session and is sponsored by broad-based US Dollar weakness.
In fact, the USD Index , which tracks the Greenback against a basket of currencies, drops to a two-month low in the wake of speculations that the Federal Reserve is nearing the end of its policy tightening cycle. The market participants now seem convinced that the US central bank will soften its hawkish stance after the expected rate hike in July.
Adding to this, the New York Fed's monthly survey revealed on Monday that the one-year consumer inflation expectation dropped to the lowest level since April 2021, to 3.8% in June from 4.1% in the previous month. This overshadows the overnight hawkish remarks by Fed officials and leads to a further decline in the US Treasury bond yields, which, in turn, is seen undermining the Greenback.
The aforementioned factors contribute to the offered tone surrounding the USD/JPY pair, though a more dovish stance adopted by the Bank of Japan might cap gains for the JPY and help limit losses. In fact, the BoJ's negative interest-rate policy is expected to remain in place at least until next year.
Investors might also prefer to move to the sidelines ahead of Wednesday's release of the latest US consumer inflation figures. The crucial US CPI report will play a key role in influencing the Fed's near-term policy, which, in turn, should drive the USD demand and provide some meaningful impetus to the USD/JPY pair.
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