The Japanese yen (JPY) fell for a second straight day on Monday, erasing most of last week’s strong gains against the U.S. dollar (USD), amid growing odds that the Bank of Japan (BoJ) is about to shift its policy stance. Bloomberg News reported that Bank of Japan officials see little need to abandon negative interest rate policy this month and that there is not enough evidence that wage growth warrants an end to ultra-loose monetary policy. This, coupled with the positive risk tone of U.S. stocks hitting a new closing high for the year, became a key factor that weighed heavily on the yen.
This, in turn, pushed USD/JPY above 146.00 on Monday, rebounding over 400 points from last Friday’s swing lows and nearly 500 points from last Thursday’s multi-month lows. However, the strong uptrend ran out of steam near the 200 hourly simple moving average (SMA), dragging spot prices down to around 145.70 during Tuesday’s Asian session amid muted USD price action. Against the backdrop of an expected soft landing for the U.S. economy, traders currently appear reluctant to make aggressive directional bets, preferring to wait for further clarity on the Federal Reserve’s next policy moves.
