- Tempered Fed rate cut expectations underpinned the USD and helped build on the recent bounce.
- Improving risk sentiment dents the JPY’s safe-haven status and remained supportive of the up-move.
The USD/JPY pair continued gaining positive traction for the third consecutive session on Tuesday and built on last week’s recovery move from four-week lows.
Despite the US President Donald Trump’s pressure for immediate rate cuts, the US Dollar remained well supported by the fact that investors continued scaling back expectations of aggressive monetary easing by the Fed at the upcoming meeting on July 30-31.
This was evident from the ongoing bounce in the US Treasury bond yields, with coupled with improving global risk sentiment undermined the Japanese Yen’s safe-haven demand and remained supportive of the ongoing positive momentum further beyond the 108.00 handle.
Reports that US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer will travel to China next week for negotiations with Vice Premier Liu He raised prospects for a trade deal and boosted investors’ appetite for perceived riskier assets.
Moving ahead, the broader market risk sentiment and the USD price dynamics might continue to act as key determinants of the pair’s momentum on Tuesday amid absent relevant market-moving economic releases and ahead of next week’s FOMC meeting.
Technical levels to watch
Share
