USDJPY – Down
USDJPY:
The Japanese yen rose to its highest level since early February against its U.S. counterpart on Friday amid bets on an imminent policy change by the Bank of Japan (BoJ). Moreover, investors seem convinced that another significant increase in Japanese wages will fuel demand-driven inflationary pressures and allow the BoJ to end negative interest rates as soon as its March 18-19 meeting. This, along with an upward revision to Japan’s fourth quarter GDP data, lends support to the Japanese Yen and keeps the USD/JPY pair low during the Asian session on Monday.
Meanwhile, the US jobs report for February confirmed expectations that the Federal Reserve (Fed) will start cutting interest rates in June and continues to put pressure on the US Dollar. This was another factor contributing to the USD/JPY pair being on the supply side for the sixth consecutive day and supporting the prospects for further rate cuts. Market attention will now turn to the US consumer inflation data due for release on Tuesday. Nevertheless, the fundamental backdrop indicates that the path of least resistance for spot prices lies to the downside.
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