On Tuesday, the USD/JPY remained under selling pressure for the third day in a row.
The dollar continued to be weighed down by dwindling chances of an earlier Fed policy tightening.
The safe-haven JPY benefited from the cautious mindset, which aided intraday selling.
During the early North American session, the USD/JPY pair continued its steady intraday decline, dropping to new multi-day lows, closer to the mid-110.00s in the previous hour.
On Tuesday, the pair continued its retracement decline from the 111.65 level, or YTD highs, and saw some follow-through selling for the third straight session. Concerns about the extremely contagious Delta version of the coronavirus continued to dampen investor confidence. This was obvious in the stock market’s cautious mindset, which benefited the safe-haven Japanese yen while acting as a headwind for the USD/JPY combination.
The US dollar, on the other hand, was pulled down by dwindling odds of a Fed policy tightening sooner than expected. Investors appear to have been persuaded by Friday’s mixed US jobs report that the US central bank will delay reducing its asset purchases or hiking interest rates for a longer period of time. A new leg down in US Treasury bond yields, on the other hand, further weakened the dollar and put pressure on the USD/JPY pair.
However, the fall is likely to be limited as investors may refrain from putting aggressive wagers in anticipation of the release of the FOMC meeting minutes on Wednesday. Investors will be looking for new signs about the Fed’s policy outlook after the surprise hawkish move at the end of the June meeting. This will be crucial in boosting the USD in the near term and giving the USD/JPY pair a new directional thrust.
Market players will be waiting for the release of the US ISM Services PMI in the meantime. The USD price dynamics will be influenced by the data, as well as the US bond yields. Aside from that, the broader market risk attitude may also help to generate some short-term trading opportunities in the USD/JPY pair./n
