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Japanese Yen struggles to capitalize on intraday gains amid BOJ uncertainty
Monday, 13 January 2025 14:26 WIB | USD/JPY |DolarYen

The Japanese Yen (JPY) remained firmer against its peers for the third straight day, despite the lack of follow-through amid faltering expectations for a Bank of Japan (BOJ) rate hike. Widespread inflationary pressures in Japan keep the case for the next BOJ rate hike in January or March open.

That said, some investors expect the BOJ to wait until April to seek confirmation that the strong wage momentum will continue into spring negotiations.

This, in turn, is holding back JPY investors from placing aggressive bets.

Further, the recent widening in the US-Japan yield differential, supported by expectations for an aggressive Federal Reserve (Fed), is helping to cap the lower-yielding JPY. Meanwhile, growing acceptance that the Fed will pause its rate-cutting cycle later this month is keeping the US Dollar (USD) firm near its highest level in over two years and lending support to the USD/JPY pair.

However, the risk-off impulse – as reflected by the softer tone in equity markets – continues to support demand for the JPY as a traditional safe haven asset.

Source: FXStreet

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