The Japanese Yen (JPY) remained firmer against its US counterpart for the second straight day on Wednesday and reacted little to a mostly in-line Producer Price Index (PPI). Bank of Japan (BOJ) Deputy Governor Shinichi Uchida's aggressive comments on Tuesday opened the door for further policy normalization and continued to act as a tailwind for the JPY.
The US Dollar (USD), on the other hand, continued to weaken on Tuesday's softer US consumer inflation figures, which raised bets that the Federal Reserve (Fed) will cut interest rates at least twice this year. This was seen as another factor exerting downward pressure on the USD/JPY pair.
Meanwhile, the latest optimism over a 90-day US-China tariff truce remained supportive of the upbeat market mood. This might hold traders from placing any aggressive bullish bets around the safe-haven JPY.
That said, divergent BoJ-Fed policy expectations suggest that the path of least resistance for the low-yielding JPY is to the upside and supports prospects for a further depreciating move for the USD/JPY pair. In the absence of any relevant market-moving economic data from the US, traders will take cues from speeches by influential FOMC members. Apart from this, the broader risk sentiment might provide some impetus to the pair. (Newsmaker23)
Source: FXstreet
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