USD/JPY weakens near 143.50, focus on Fed’s Bowman speech

• USD/JPY loses ground around 143.55 in Tuesday’s early Asian session. 
• Fed rate cut maintains bearish mood surrounding USD/JPY. 
• BoJ policymakers tempered another hike speculation, which might cap the JPY’s upside; rising geopolitical risks could boost the JPY. 

The USD/JPY pair trades with mild losses near 143.55 during the early Asian session on Tuesday. The decline in US Dollar (USD) continues to weigh on the pair. The US September Consumer Confidence is due later in the day and the Federal Reserve (Fed) Governor Michelle Bowman is set to speak.  

The Fed rate cut last week had been highly expected, though the decision to cut by 50 basis points (bps) was somewhat of a surprise. Minneapolis Fed President Neel Kashkari said on Monday that he believes there should be and will be additional interest rate cuts in 2024. However, Kashkari expects future cuts to be smaller than the one from the September meeting. 

Chicago Fed President Austan Goolsbee noted, “Many more rate cuts are likely needed over the next year, rates need to come down significantly.” Additionally, Atlanta Fed President Raphael Bostic said Monday that the US economy is close to normal rates of inflation and unemployment and the central bank needs monetary policy to "normalize" as well. The Greenback remains under pressure amid the rising expectation that the Fed will cut additional interest rates in the remainder of 2024. 

However, the speculation that the Bank of Japan (BoJ) is not in a rush to raise interest rates might cap the upside for Japanese Yen (JPY). The BoJ left interest rates unchanged last week as policymakers need time to assess when it needs to raise borrowing costs further. "The majority of market players had expected the next rate hike to take place in December, but Mr. Ueda's remarks prompted some of them to think that maybe it will be delayed until early next year,” said Tomoichiro Kubota, senior market analyst at Matsui Securities Co.

Meanwhile, the rising geopolitical tensions in the Middle East might boost the safe-haven flows, benefiting the JPY. Bloomberg reported early Tuesday that Israel carried out airstrikes on targets in southern Lebanon, killing almost 500 people in one of the bloodiest days of fighting in nearly two decades and fuelling concerns of all-out conflict.