The Japanese Yen continues to be undermined by the BoJ’s uncertain outlook about future rate hikes.
Intervention fears and persistent geopolitical tensions could help limit losses for the safe-haven JPY.
Reduced Fed rate cut bets favor the USD and support prospects for a further move up for USD/JPY.
The Japanese Yen (JPY) continues with its struggle to register any meaningful recovery against its American counterpart and drops to a fresh multi-decade low during the Asian session on Monday. The Bank of Japan's (BoJ) dovish outlook, indicating that it is in no rush in terms of policy normalization, continues to undermine the JPY. Bearish traders, however, remain on alert and refrain from placing aggressive bets in the wake of the recent warnings by Japanese authorities, showing readiness to intervene in the market to prop up the domestic currency.
Adding to this, persistent geopolitical tensions stemming from a further escalation of conflicts in the Middle East turn out to be another factor lending some support to the safe-haven JPY. The US Dollar (USD), on the other hand, is seen consolidating its recent strong gains to the highest level since early November amid expectations that the Federal Reserve (Fed) may delay cutting interest rates. This, in turn, suggests that the difference in rates between the US and Japan will stay wide for some time, which, in turn, should act as a tailwind for the USD/JPY pair.
