The Japanese Yen (JPY) extended its gains against the US Dollar (USD) on Monday, strengthening slightly after staging a sharp rebound from a four-month low of 150.84 following Friday's disappointing US employment report. The softer labor market print has fueled expectations of monetary policy easing by the Federal Reserve (Fed) at its next meeting in September, which is weighing on the Greenback and boosting demand for the safe-haven Yen.

At the time of writing, the USD/JPY pair is hovering near 147.00 during American trading hours, having given up recent gains that were fueled by a strong US Dollar rally earlier in the week. Meanwhile, the US Dollar Index (DXY), which tracks the value of the Greenback against a basket of six major currencies, is showing signs of stabilization, currently trading around 98.80 after pulling back from a two-month high of 100.26.

The pause in US Dollar momentum reflects growing uncertainty over the Fed's next move, as traders reassess the likelihood of a rate cut as early as September. This shift stands in contrast to the Fed's hawkish stance at its latest meeting, where officials stressed a data-dependent approach and flagged persistent inflation risks, especially from tariffs and supply-side pressures. Fed Chair Jerome Powell offered no clear forward guidance, saying no decision had been made for September and underscoring the need for more evidence of cooling inflation. Still, with labor market weakness surfacing and internal dissent growing, two Fed governors voted for immediate easing  market participants are increasingly leaning toward a dovish pivot.

Source: Fxstreet