In the Asian market on Tuesday, the Japanese yen (JPY) continued its sideways price trend, with the yen-dollar rate remaining near the year’s low. Comments overnight by Japan’s top foreign exchange official Masato Kanda fueled speculation that Japanese authorities were prepared to take appropriate action and would use market operations to support the currency. This has become a key factor supporting the Japanese yen and serves as a headwind for the USD/JPY pair.
Nonetheless, the lack of clarity on the Bank of Japan’s future policy measures has prevented yen bulls from actively betting. On the other hand, the U.S. dollar (USD) continues to draw support from optimism about U.S. economic growth, which may force the Federal Reserve (Fed) to maintain higher interest rates for longer. This in turn helped to limit USD/JPY’s consolidation ahead of BoJ core inflation and US Personal Consumption Expenditure (PCE) price index data.
