Ella 
During the Asian session on Tuesday, USD/JPY struggled to extend the previous day’s bullish trend, swinging between slight gains/slight losses. USD/JPY is currently trading just above the psychological 150.00 mark and is finding support from some follow-through buying in the US Dollar (USD).
The dollar’s gains may be due to some position-setting trades ahead of speeches by influential Fed members, including Federal Reserve Chairman Jerome Powell, which could provide insight into future Fed rate hikes. New clues to the path. Investors seem to believe that the Fed’s policy tightening campaign is nearing its end and may begin cutting interest rates in June 2024. U.S. employment data released last Friday was weaker than expected, heating up investor bets, but a Fed official’s speech overnight sent an unclear signal on the next policy move.
In fact, Fed Governor Lisa Cook noted that the central bank’s current target rate is enough to get inflation back to the Fed’s 2% target. Cook added that we will continue to remain vigilant to ensure that our inflation target is achieved. Minneapolis Fed President Neel Kashkari said that the U.S. economy has proven to be very resilient and that implementing tightening policies will not allow the Fed to return to its 2% target within a reasonable period of time. . This has led to a strong recovery in U.S. bond yields, which is therefore seen as a “tailwind” for USD/JPY.
On the other hand, the more dovish stance taken by the Bank of Japan (BOJ) weighed on the yen. Indeed, Bank of Japan Governor Kazuo Ueda said on Monday that the likelihood of achieving the 2% inflation target was increasing, but that progress was not enough to end ultra-loose monetary policy. This comes after the Bank of Japan fine-tuned its bond yield curve control policy last week, signaling a slow exit from a decade-long easy monetary policy setting and continuing to weigh on the yen.
However, upside potential for USD/JPY appears limited amid speculation that Japanese authorities will intervene in FX markets to stem continued currency depreciation. This requires aggressive bullish traders to exercise caution before entering into positions for a clear uptrend in USD/JPY. In the absence of any market-moving economic data from the United States, comments from Fed officials will play a key role in influencing USD price dynamics and provide a clear boost to USD/JPY.
