The US Dollar (USD) struggles to extend its advance against the Japanese Yen (JPY) above 162.00 for almost a week.
The USD/JPY pair is failing to gain further as the US Dollar corrects due to easing market expectations for at least two interest rate hikes by the Federal Reserve (Fed) this year
At press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally lower to near 101.35. The DXY has corrected from its over-a-year high of 101.80 posted on Wednesday. According to the CME FedWatch tool, the odds of the Fed delivering at least two interest rate hikes this year are 41.7%, down from 50.2% seen a week ago.
The prospects of at least two interest rate hikes by the Fed this year have eased as oil prices have returned close to pre-war levels amid an increase in energy flows through the Strait of Hormuz, a critical chokepoint to almost 20% of global energy supply. However, Fed officials still believe that US inflation will remain elevated for a longer period. On Thursday, New York Fed Bank President John Williams said in a speech that the monetary policy is “well-positioned” and pushed back hopes of price pressures returning to the 2% target before 2028.