Ella 
The Japanese yen (JPY) edged lower during Tuesday’s Asian session, paring some of the gains from the previous day’s strong rebound from a two-week low against its US counterpart. Overall market sentiment remained cautiously optimistic amid signs of easing trade tensions between the two largest economies, the United States and China, and expectations that the US will start announcing some trade deals. This in turn was seen as weakening traditional safe-haven assets including the Japanese yen, although traders seemed reluctant to make aggressive directional bets ahead of the Bank of Japan (BoJ) policy meeting this week.
The Bank of Japan is scheduled to announce its decision on Thursday and is expected to keep interest rates unchanged as risks to the fragile economy from US tariffs intensify. However, signs of a broad-based rise in inflation in Japan leave room for the BoJ to tighten policy further. Moreover, ongoing geopolitical tensions and US President Donald Trump’s rapidly changing stance on trade policy have kept investors on their toes, which could limit losses for the yen. Moreover, underlying bearish sentiment surrounding the US dollar (USD) should help limit any substantial gains in the USD/JPY pair.
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