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USD/JPY slips near 160 as traders watch for possible Japan intervention
The Fed rate outlook shifted after July CPI cooled, with September hike odds falling to about 36% and keeping the dollar supported even as the yen stays under pressure.
USD/JPY edged lower in European trading, hovering around 159.4 and lingering near the key 160.0 level, where traders are watching for any potential intervention by Japanese authorities, FXStreet reported.
Analysts noted that the yen remains under fundamental pressure from wide interest rate differentials, fiscal worries, and higher import costs. Commerzbank said recent USD/JPY moves have unwound much of the post-intervention yen strength after a coordinated US-Japan intervention earlier this month.
The yen’s direction is also being weighed against changing Bank of Japan expectations and the possibility of renewed policy action, FXStreet added. At the same time, the US dollar has received support from escalating US-Iran tensions, including stalled diplomacy and threats around sanctions and Iranian oil exports.
On the US side, FXStreet pointed to softer inflation metrics, which have influenced Federal Reserve expectations. July headline CPI eased to 3.4% year over year and core CPI cooled to 2.5%, leading CME FedWatch to show September rate hike odds around 36%, down from 48% earlier.
Latest closeUSD/JPY 159.42 ▲0.2%