- USD/JPY has shed 20 pips in the last hour.
- The dollar is on the defensive, possibly due to dovish Fed expectations.
- AUD/JPY selling may have weighed over USD/JPY.
USD/JPY is feeling the pull of gravity this Tuesday morning in Asia with the US dollar losing ground against most majors except the AUD.
The currency pair is currently trading at 108.34, having shed 22 pips over the last sixty minutes or so.
The moderate drop could be associated with the broad-based US Dollar weakness, as represented by the Dollar Index, which is currently trading at 97.45 – down 15 pips from the overnight high of 97.60.
The greenback has come under pressure, possibly due to the widespread expectation that the Federal Reserve would lay the groundwork for a rate cut later this year. The central bank is scheduled to announce its decision on interest rates at 18:00 GMT on Wednesday.
Also, the selling in the AUD/JPY cross may have added to the bearish pressure around the USD/JPY pair. The JPY cross fell to fresh five months lows earlier today in response to dovish RBA minutes and a weaker-than-expected Aussie house price index figures.
Bank of Japan’s Kuroda, while speaking in parliament earlier today, took note of the heightened uncertainty in the global economy. His dovish comments, however, have been ignored by markets. Moreover, it is generally accepted by now that the BOJ has exhausted its ammo and the central bank is unlikely to achieve its 2% inflation target any time soon.
Looking forward, the pair may remain under pressure, courtesy of dovish Fed expectations.
Pivot levels
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