USD/JPY

United Overseas Bank strategists Quek Ser Leang and Lee Sue Ann note that USD/JPY lacks clear directional cues in the short term, with intraday price action expected to remain confined between 157.55 and 158.45. Over the next one to three weeks, they see the pair trading in a broader 156.35–158.70 range. On a one to three month horizon, they highlight building downward momentum and potential further USD/JPY weakness.

MUFG’s Lee Hardman notes that the Japanese Yen has softened after a Bloomberg report on the GPIF’s September meeting, lifting USD/JPY back above 158.00.

The USD/JPY pair attracts some buyers following the previous day's two-day price moves, trading above the 158.00 mark during the early part of the European session on Tuesday.

Bank of Japan (BoJ) Governor Kazuo Ueda said on Tuesday that the Japanese economy is recovering moderately albeit with some weaknesses. Ueda added that price trend is approaching 2%.

The Bank of Japan (BoJ) could indicate later this month that underlying inflation has reached nearly its 2% target, according to three sources familiar with the central bank’s thinking. Such a signal would underscore the BoJ’s willingness to resume raising interest rates in the coming months.

USD/JPY moves little after posting minor gains in the previous day, trading around 157.90 during Asian hours on Tuesday. The currency pair has steadied into a tight trading range following recent developments in Japanese fiscal policy.