Japan’s expansionary fiscal policy and rate gap with major economies continue to pressure the Yen, offsetting a weaker USD.
The USD/JPY pair remains rangebound below 160.00, trading around 159.30 despite a softer US Dollar. The Yen’s underperformance stems from Japan’s high government debt, expansionary fiscal stance, and a significant interest-rate differential with other major economies.
Expectations of a Bank of Japan rate hike next month have provided limited support. Tokyo CPI data on Friday may offer further insight into the central bank’s policy trajectory. Meanwhile, the US Dollar Index (DXY) hovers near 98.95, close to a three-month low, after the US Treasury’s decision to increase buybacks of longer-dated securities raised fiscal concerns.
Key US data this week, including the PCE Price Index and Fed commentary, could influence the Greenback’s direction and broader market sentiment.