USD/JPY recovers early losses and rebounds to near 148.00 as US Dollar extends upside

USD/JPY recovers to near 148.00 as the US Dollar extends its winning streak.
The Fed signals two more interest rate cuts in the remainder of the year.
The BoJ kept interest rates steady at 0.5%, as expected.

Sagar Dua FXStreet

The USD/JPY pair claws back its early losses and recovers to near 148.00 during the European trading session on Friday. The pair bounces back as the US Dollar (US) extends its winning streak for the third trading session.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, rises to near 97.63 at the time of writing.

The USD Index has been performing strongly since the announcement of the monetary policy by the Federal Reserve (Fed). On Wednesday, the Fed reduced interest rates by 25 basis points (bps) to 4.00%-4.25% and signaled further monetary policy easing in the remainder of the year. Fed’s dot plot showed that policymakers see interest rates declining to 3.6% by the end of the year.

In Friday’s session, investors will focus on the speech from San Francisco Fed President Mary Daly, which is scheduled at 18:30 GMT. Investors would look for cues regarding the pace of the interest rate cuts by the Fed in the monetary policy meeting ahead.

Earlier in the day, the pair fell sharply as the Japanese Yen (JPY) gained after the monetary policy announcement by the Bank of Japan (BoJ). The Japanese central bank held interest rates steady at 0.5%, as expected, and kept the door open for interest rate hikes.

“Will continue to raise policy rate if economy, prices move in line with forecast, in accordance with improvements in economy, prices,” BoJ Governor Kazuo Ueda said.

Economic Indicator

BoJ Interest Rate Decision

The Bank of Japan (BoJ) announces its interest rate decision after each of the Bank’s eight scheduled annual meetings. Generally, if the BoJ is hawkish about the inflationary outlook of the economy and raises interest rates it is bullish for the Japanese Yen (JPY). Likewise, if the BoJ has a dovish view on the Japanese economy and keeps interest rates unchanged, or cuts them, it is usually bearish for JPY.

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