Traders trim bearish JPY positions on intervention risks and BoJ hawkishness while awaiting Fed minutes for policy clues.
The USD/JPY pair dropped 0.32% to 159.10 on Wednesday as the US Dollar retreated toward June lows. The Dollar Index (DXY) fell 0.23% to 99.40, pressured by dovish Fed rate expectations following softer US economic data, reducing September hike odds.
Recent inflation concerns tied to rising energy costs and geopolitical tensions in the Strait of Hormuz keep Fed rate hike prospects alive. The Japanese Yen strengthened against peers as traders avoided large short positions amid potential FX intervention and hawkish Bank of Japan signals.
Markets now await the FOMC July meeting minutes at 18:00 GMT for further guidance on the Fed’s policy trajectory. Despite intraday gains, the Yen’s broader outlook remains cautious.