The USD/JPY pair finds support above the 149.00 mark during early Asian trading hours on Tuesday. The speculation that the Bank of Japan (BoJ) may tweak its Yield Curve Control (YCC) approach boosts the Japanese Yen (JPY) against the US Dollar (USD). The BoJ monetary policy meeting on Tuesday will be in the spotlight. The pair currently trades near 149.15, gaining 0.04% on the day.
Market players await the highly anticipated BoJ meeting. On Monday, Nikkei reported that BoJ will consider adjusting its Yield Curve Control (YCC) framework to allow the 10-year Japanese Government Bond (JGB) to exceed 1.0% on Tuesday's monetary. BOJ Govorner Kazuo Ueda said the new 1.0% cap was flexible, not rigid. The JPY edged higher against the USD following this headline. It’s worth noting that the long-term rate is currently set at 1%, with BoJ conducting unlimited fixed-rate purchases to maintain yields below that level.
The Federal Reserve (Fed) Chair Jerome Powell affirmed last week that they would leave interest rates unchanged at its November meeting on Wednesday, but whether they will hold for December will depend on the incoming data. Powell further stated that the US rate could go up again if high economic growth and a labor shortage continue.
Markets currently priced in a 23% chance of the Fed hiking 25 basis points (bps) on Wednesday, according to the CME Fedwatch tools. The hawkish comments from Fed officials might cap the downside of the Greenback and act as a tailwind for the USD/JPY pair.
Moving on, the BoJ monetary policy meeting and BoJ Press Conference will be closely watched events. These events could trigger volatility in the market. Later this week, the Fed interest rate decision will be announced.
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