On Monday’s early European trading hours, the USD/JPY pair snapped its recent three-day losing streak, hovering around 153.70. This reversal in the USD/JPY’s downward trajectory can be attributed to a resurgence in the US Dollar (USD).
The US Dollar Index (DXY), measuring the performance of the USD against a basket of six major currencies, currently rests near 105.10. However, the appreciation of the Greenback may face limitations due to lower US Treasury yields.
The US Dollar encountered challenges following the release of softer-than-expected US jobs data on Friday, reviving speculation regarding potential interest rate cuts by the US Federal Reserve (Fed) later in the year. Market sentiment may continue to lean towards risk-taking this week, bolstered by Fed Chair Jerome Powell’s relatively dovish remarks on monetary policy during Wednesday’s session.
Federal Reserve Bank of Chicago President Austan Goolsbee, in an interview with Bloomberg TV on Friday, characterized the April labor market data as robust. Goolsbee emphasized the importance for the Fed to assess its commitment to curbing inflation, highlighting that a prolonged restrictive stance may necessitate consideration of the employment aspect of its mandate.
In Japan, markets remained closed on Monday due to a national holiday, raising concerns of potential intervention risks. Last week witnessed the Japanese Yen (JPY) appreciating amidst speculation of government intervention by Japanese authorities. According to Reuters, data from the Bank of Japan (BoJ) indicated that Japanese authorities may have allocated approximately ¥6.0 trillion on April 29 and ¥3.66 trillion on May 1 to reinforce the JPY.
