Ella 
USD/JPY strengthened to around 155.85 in early Asian trading on Wednesday, interrupting a two-day losing streak. USD/JPY upside may be limited as more investors speculate that the Bank of Japan (BoJ) will continue to raise interest rates to boost USD/JPY.
According to Reuters, Toshimitsu Motegi, a senior official of the ruling party, said that the Bank of Japan should more clearly communicate its determination to normalize monetary policy, including taking measures to steadily raise interest rates. Expectations that the Bank of Japan will further tighten monetary policy may temporarily boost the yen (JPY) against the US dollar (USD).
However, many analysts believe that the Bank of Japan is likely to maintain loose monetary conditions as long as possible. JPMorgan analysts do not expect the Bank of Japan to raise interest rates in July or for the rest of 2024. The Bank of Japan’s monetary policy meeting next week will be closely watched.
On the other hand, the Federal Reserve (Fed) is expected to cut interest rates in September, and the Chicago Mercantile Exchange FedWatch tool shows that the market believes that the probability of the Fed cutting interest rates by at least 25 basis points is 96%. Investors will get more clues from key US economic data this week. The first reading of the S&P Global PMI for June in the US is due on Wednesday. The manufacturing PMI is expected to rise to 51.7 in July from 51.6 in June, while the services PMI is expected to fall slightly to 54.4 in July from 55.3 previously. Later this week, the US second quarter gross domestic product (GDP) and the US PCE price index for June will be in focus.
