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USD/JPY holds near 159 as traders await PCE and Jackson Hole cues
FXStreet said US and Iran-related risk, plus oil-linked inflation concerns, are keeping support for the dollar while traders wait for the US PCE Price Index and a Fed Chair speech for direction.
The USD/JPY pair was consolidating in a narrow range just above 159.00 during Tuesday's Asian session, with traders waiting for a fresh catalyst to drive the next directional move, according to FXStreet.
FXStreet said the fundamental picture is tilted toward the USD, citing concerns around Japan's worsening fiscal outlook from higher long-term rates, a large national debt burden, and expansionary budget pressures. The outlet added that Japan's interest rates remain lower than those in other major economies, keeping the JPY carry trade active, which has so far offset the effect of a joint US-Japan currency intervention announced in late July.
The dollar's support is also linked to heightened war risk. FXStreet noted that U.S. Treasury Secretary Scott Bessent announced the US is launching a campaign to isolate Iran from the global economy, warning that any country doing business with Iran faces US sanctions, and it referenced Iran officials warning of potential disruption to oil exports via the Strait of Hormuz and elsewhere in the Persian Gulf if economic war continues.
Still, FXStreet said investors appear hesitant to press aggressive USD upside bets because expectations for immediate additional Fed policy tightening have diminished, and renewed concerns tied to a US Treasury bond market intervention failure are seen as a headwind. The outlet pointed to the release of the US Personal Consumption Expenditures, or PCE, Price Index on Wednesday and scrutiny of Fed Chair Kevin Warsh's speech at the Jackson Hole Symposium as near-term drivers for USD/JPY price action.
Latest closeUSD/JPY 159.31 ▼0.1%