Introduction:
The USD/JPY pair is under pressure on Friday as a combination of factors prompts fresh selling. Expectations for a less hawkish Fed and sliding US bond yields are weighing on the buck, while banking crisis woes are benefiting the safe-haven JPY. However, the BoJ’s dovish outlook could cap gains for the JPY and lend support to the major.
Less Hawkish Fed and Sliding US Bond Yields:
The USD is under pressure due to expectations for a less hawkish Fed. This is in response to weaker-than-expected economic data, which has raised concerns over the strength of the US economy. As a result, investors are now pricing in a slower pace of rate hikes by the Fed, which is weighing on the USD and contributing to the intraday slide of the USD/JPY pair. Additionally, sliding US bond yields are also adding to the bearish pressure on the USD.
Banking Crisis Woes Benefit Safe-Haven JPY:
Another factor that is contributing to the slide of the USD/JPY pair is banking crisis woes. The recent collapse of the Turkish lira has led to concerns over the exposure of European banks to Turkey’s economy. This has raised concerns over the stability of the banking sector, which is benefiting the safe-haven JPY.
BoJ’s Dovish Outlook Could Cap Gains:
However, the BoJ’s dovish outlook could cap gains for the JPY and lend support to the USD/JPY pair. The BoJ has signaled that it will maintain its accommodative monetary policy, which is likely to keep the JPY from appreciating too much. This could help to limit gains for the JPY and provide support for the USD/JPY pair.
Conclusion:
In conclusion, the USD/JPY pair is experiencing fresh selling on Friday as a combination of factors weigh on the buck. Expectations for a less hawkish Fed and sliding US bond yields are contributing to the intraday slide, while banking crisis woes are benefiting the safe-haven JPY. However, the BoJ’s dovish outlook could cap gains for the JPY and lend support to the USD/JPY pair. It remains to be seen whether these factors will continue to influence the currency pair in the coming weeks.
