According to FXStreet, on October 22, the Japanese Yen (JPY) weakened against the US Dollar (USD), struggling to capitalize on the reasons for a slight increase in the previous trading session.
The main reason is the market's growing belief that the Bank of Japan (BoJ) will not raise interest rates further this year, coupled with uncertainty about the monetary policy direction of the new political leaders.
Bank of Japan Governor Kazuo Ueda stressed last week that the BoJ would not rush to raise interest rates further. Moreover, dovish comments from Japanese Prime Minister Shigeru Ishiba have added to uncertainty about the new political leadership’s monetary policy direction, which has been a drag on the JPY.
In addition, US government bond yields rose to their highest level in nearly three months, further reducing the attractiveness of the yen. This puts further pressure on the JPY ahead of Japan's general election on October 27.
Meanwhile, the USD has maintained its strong momentum since the beginning of the month due to expectations that the US Federal Reserve (Fed) will cut interest rates less aggressively. This helps the USD gain an advantage over the JPY.
There are suggestions that the Japanese government may intervene to support the yen, leaving investors wondering whether the yen will continue to decline. In addition, lower risk sentiment also supports the yen as a safe-haven asset, helping to limit the JPY's weakness.
According to Lao Dong, at 2:00 p.m. on October 22, the USD/JPY exchange rate is currently fluctuating between 150.5-151.1 JPY/USD.
