The USD/JPY pair is trading in a narrow range in the Asian session, around 159.70-159.75, just below a two-month peak. The Japanese Yen’s upside is limited due to fears of intervention by Japanese authorities or the Bank of Japan to support the currency. Despite warnings from Japan’s Vice Finance Minister, the BoJ’s lack of clarity on reducing bond purchases highlights a contrast with the Fed’s hawkish stance, suggesting a bullish trend for USD/JPY.
The Fed’s decision to pause rate cuts in June indicates a cautious approach towards future cuts. Policymakers have hinted at a possible rate cut in September, driven by easing inflationary pressures in the US. Traders are awaiting key economic data, including the US Q1 GDP and the PCE Price Index, which will impact the Fed’s policy decision and influence the USD/JPY pair’s direction in the near term.