Yen Under Pressure After Hawkish Fed Stance; Traders Await Friday’s BoJ Policy

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The Japanese yen experienced a dip against a basket of major currencies in early trading today, as market participants widely expect the Bank of Japan (BoJ) to maintain its current interest rate policy in its upcoming decision on Friday. This downward movement follows a brief rebound on Thursday, which was quickly reversed by a strengthening US Dollar, bolstered by the Federal Reserve’s hawkish stance.

Investors are keenly awaiting the BoJ’s policy announcement, focusing on any indications of a potential reduction in the central bank’s monthly bond purchases. Such a move could alleviate some of the selling pressures on the Japanese yen, providing a degree of support to the currency.

Meanwhile, Japanese treasury yields have continued their descent from the peak levels reached in May. These yields are likely to remain under pressure unless the BoJ adopts a more hawkish tone. The decline in yields could also exert additional downward pressure on the yen. However, the possibility of intervention looms if the Japanese currency revisits the lows observed in April, which could prompt a strategic response from the BoJ to stabilize the yen.

As the market looks ahead, the key focus remains on the BoJ’s stance and any shifts in policy that could influence the trajectory of the Japanese yen and treasury yields. Investors will be scrutinizing the BoJ’s statements for clues on future monetary policy adjustments and their implications for the currency market.