The USD/JPY currency pair is experiencing modest buying activity around 149.75 during Tuesday’s Asian trading session. The US Dollar (USD) is showing strength as traders look ahead to further developments, particularly US President Donald Trump’s upcoming speech. The focus will shift on Wednesday to the release of the US ISM Services Purchasing Managers Index (PMI) for February, which could provide further insights into economic performance.
At the same time, the US Dollar Index (DXY), which tracks the USD against its major trading partners, is hovering around 105.75, reflecting a 0.18% daily gain. However, the greenback’s upside potential may be capped due to concerns about slowing economic growth and the ongoing effects of tariffs.
“Fears about weaker U.S. and global economic activity are manifesting in the markets, with cyclicals driving the sell-off,” commented Kyle Rodda, senior financial markets analyst at Capital.com.
Meanwhile, the Japanese Yen (JPY) could find support from recent hawkish comments made by Japanese authorities, potentially limiting gains for the USD/JPY pair. Bank of Japan (BoJ) Deputy Governor Shinichi Uchida stated on Wednesday that the BoJ would continue to raise interest rates if its economic forecasts materialize. Uchida emphasized that Japan’s exit from its long-standing ultra-loose monetary policy has only just begun.
The BoJ is widely expected to persist with rate hikes this year, underpinned by improving economic conditions, rising prices, and stronger wage growth, all of which align with the central bank’s efforts to normalize its policy.
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