Anna 
In the European session on Monday, the USD/JPY pair continues its upward momentum, trading at around 150.30 for the second consecutive session. The Japanese Yen (JPY) faces challenges following remarks by Bank of Japan (BoJ) Governor Kazuo Ueda on Friday, expressing skepticism about the sustainability of Japanese inflation reaching the 2% target. Diminishing inflationary pressures raise the possibility of the BoJ postponing plans for monetary policy tightening.
On the flip side, reports from Japan’s Kyodo News agency suggest that the government is contemplating officially declaring an end to deflation, signaling an increased likelihood of policy tightening. A decision is pending an assessment of the strength of the annual labor-management wage talks scheduled for March 13, coupled with a consideration of the outlook for price trends.
The US Dollar Index (DXY) remains stable around 103.80, seeking direction amidst improved US Treasury yields. Despite subdued manufacturing figures from the United States (US) in February, with the ISM Manufacturing PMI dropping to 47.8 from 49.1 and the US Michigan Consumer Sentiment Index falling to 76.9, Federal Reserve (Fed) officials have not hinted at immediate interest rate cuts, providing some support to the USD.
Investors are closely monitoring upcoming economic releases, including the ISM Services PMI, ADP Employment Change, and Nonfarm Payrolls for February, to gauge the overall health of the US economy and potential Fed policy decisions. Additionally, Federal Reserve Chair Jerome Powell’s speech scheduled for Wednesday and Thursday is eagerly anticipated for further insights into the central bank’s monetary policy stance. As the USD/JPY pair continues to navigate through these economic dynamics, market participants remain vigilant for potential shifts in sentiment and policy expectations.
