The Japanese Yen declines despite a hawkish mood surrounding the BoJ’s policy outlook.
The downside of the JPY could be limited as traders expect the BoJ to increase interest rates further.
US Fed Chair Powell signaled a rate cut soon, which puts downward pressure on the US Dollar.
The Japanese Yen (JPY) continues to lose ground against the US Dollar (USD) for the second consecutive day on Tuesday. However, the downside of the JPY could be restrained due to the hawkish mood surrounding the Bank of Japan (BoJ).
Additionally, the contrasting statements from the BoJ and the Federal Reserve (Fed) regarding their policy outlooks are putting downward pressure on the USD/JPY pair. BoJ Governor Kazuo Ueda stated in Parliament on Friday that the central bank could raise interest rates further if its economic projections are accurate.
Meanwhile, Fed Chair Jerome Powell stated at the Jackson Hole Symposium, "The time has come for policy to adjust." However, Powell did not specify when rate cuts would begin or their potential size. Additionally, San Francisco Federal Reserve President Mary Daly stated on Monday in an interview with Bloomberg TV that "the time is upon us" to begin cutting interest rates, likely starting with a quarter-percentage point reduction.
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