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Yen firms as risk sentiment improves, USD/JPY slips toward 163.70

The dollar index stayed in negative territory and investors looked ahead to this week’s Fed decision on Wednesday and BoJ policy meeting on Friday.

Reported · Written up by our desk · Major Pairs

USD/JPY edged lower on Monday, trading around 163.70, while the yen firmed as improving risk sentiment pressured the US dollar, according to FXStreet. The tone in markets strengthened after Washington and Tehran confirmed they had paused attacks against each other, boosting hopes for renewed diplomatic efforts.

FXStreet added that US equities rose, reinforcing a more risk-on backdrop. The US Dollar Index (DXY) remained below zero, and traders said attention was turning to central bank decisions this week, with the Federal Reserve expected on Wednesday and the Bank of Japan scheduled for Friday.

Both central banks are widely expected to keep interest rates unchanged, FXStreet reported, with investors focusing on the policymakers’ tone rather than the decision itself. In Japan, expectations remain for the BoJ to maintain a gradual tightening bias, supported by a Reuters poll showing most economists see another rate hike by year end.

The outlet also cited softer US data as a factor behind the dollar’s weakness, noting durable goods orders rose 0.3% in June versus expectations for a 1.6% increase. Analysts at MUFG said a drop in energy prices brought relief for Japanese policymakers and helped slow upward momentum in USD/JPY as it held just below 164.00 in late last week.

Latest closeUSD/JPY 163.79 ▲0.4%|Dollar index 101.47 ▲0.0%

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