JPY Struggles Amid Fiscal Woes, Wide Interest Rate Gap
The Japanese Yen (JPY) is struggling to gain traction amidst concerns over Japan's massive national debt burden and expanding fiscal policies. The wide interest rate gap between Japan and other major economies, including the US, continues to undermine confidence in the JPY.
Meanwhile, the US Dollar (USD) is attracting fresh buyers following the previous day's pullback from an over two-week top, fueled by hawkish US Federal Reserve (Fed) expectations and escalating US-Iran tensions. The Fed's tightening bias has been supported by inflation fears stemming from higher energy prices.
The USD/JPY pair remains close to a one-month peak, but JPY bulls seem hesitant due to the aforementioned fundamental backdrop. Traders now look to this week's important US macro releases, starting with the ISM Manufacturing PMI later today and culminating in the US Nonfarm Payrolls (NFP) report on Friday.
The technical analysis suggests that the pair is holding in a neutral near-term stance as it consolidates above the 100-period Simple Moving Average (SMA) at 159.19, but remains capped by the 200-period SMA at 160.26.