JPY/USD Upside Down Following Dollar’s Recent Performance

The USD/JPY pair fell to near 149.30 on Tuesday, reversing earlier gains that saw it briefly surpass the 150.00 level. This decline was driven by a weakening US Dollar, which suffered due to a sharp drop in US Treasury yields. The 10-year US Treasury yield fell 1.7% to around 4.32% as market expectations grew for the Federal Reserve to begin easing monetary policy as early as June.

The CME FedWatch tool now indicates a 76% probability of a rate cut in June, up from 56% just a week ago. This shift in sentiment followed weaker-than-expected US flash S&P Global PMI data for February, which showed the service sector contracting for the first time in 25 months.

Concurrently, the Japanese Yen has strengthened in recent weeks due to increasing speculation that the Bank of Japan will implement another interest rate hike this year. This anticipation is fueled by rising inflation, with Japan’s national CPI reaching a two-year high of 4% in January.