USDJPY: What's changing at the start of the week?
The Japanese Yen (JPY) sticks to its strong intraday gains in the wake of a strong domestic Gross Domestic Product (GDP) print, which reaffirmed bets that the Bank of Japan (BoJ) will hike interest rates further. Furthermore, the narrowing of the US-Japan rate differential turns out to be other factors underpinning demand for the lower-yielding JPY. Apart from this, the prevalent US Dollar (USD) selling bias keeps the USD/JPY pair depressed just above mid-151.00s, or near a one-week low touched during the Asian session earlier this Monday.
That said, concerns about US President Donald Trump's reciprocal tariffs might hold back the JPY bulls from placing aggressive bets. Moreover, the growing acceptance that the Federal Reserve (Fed) would retain its hawkish stance and keep interest rates on hold for an extended period acts as a tailwind for the USD, which, in turn, helps limit losses for the USD/JPY pair. Nevertheless, the fundamental backdrop seems tilted in favor of the JPY bulls and suggests that the path of least resistance for the currency pair remains to the downside.
That said, concerns about US President Donald Trump's reciprocal tariffs might hold back the JPY bulls from placing aggressive bets. Moreover, the growing acceptance that the Federal Reserve (Fed) would retain its hawkish stance and keep interest rates on hold for an extended period acts as a tailwind for the USD, which, in turn, helps limit losses for the USD/JPY pair. Nevertheless, the fundamental backdrop seems tilted in favor of the JPY bulls and suggests that the path of least resistance for the currency pair remains to the downside.
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