The Japanese Yen (JPY) traded in a narrow range on Tuesday, lacking firm intraday direction against the US Dollar (USD) as traders weighed the likelihood of a Bank of Japan (BoJ) rate hike in December. While recent BoJ statements and solid inflation data have supported expectations for a hike at the upcoming policy meeting, mixed signals, including dovish comments from a BoJ board member, have introduced uncertainty, tempering JPY strength.
Geopolitical tensions, trade war fears, and cautious market sentiment provided some support for the safe-haven JPY. Meanwhile, subdued US Dollar price action and capped US Treasury yields, stemming from Federal Reserve (Fed) rate cut expectations, acted as headwinds for the USD/JPY pair. However, lingering fears that US President-elect Donald Trump’s policies could stoke inflation offered modest support to the USD.
Key upcoming events, such as the release of US Consumer Price Index data on Wednesday, are expected to provide further direction for the USD/JPY pair, ahead of the Federal Reserve and BoJ policy meetings next week.


