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- USD/JPY gains some positive traction on Monday, albeit struggles to capitalize on the move.
- The divergent BoJ-Fed policy expectations turn out to be a key factor capping further gains.
- A positive risk tone undermines the safe-haven JPY and could lend some support to the pair.
The USD/JPY pair struggles to capitalize on its modest Asian session uptick to the 148.00 mark and drops to a fresh daily low in the last hour. Spot prices currently trade just below mid-147.00s and seem vulnerable to prolong Friday’s retracement slide from a two-week top.
The prevalent risk-on mood, bolstered by signs of easing fears of a recession in the US, undermines the safe-haven Japanese Yen (JPY) and lends some support to the USD/JPY pair amid a modest US Dollar (USD) uptick. That said, rising geopolitical tensions in the Middle East keep a lid on the optimism in the markets. Furthermore, the divergent Bank of Japan (BoJ)-Federal Reserve (Fed) policy expectations keep a lid on any meaningful upside for the currency pair.
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