USD/JPY Pair Sees Modest Losses Amid BoJ Rate Hike Bets

The Japanese Yen saw a minor recovery from its two-week low on Friday amid reports that the Bank of Japan (BoJ) is set to raise interest rates as soon as September. This news weighed down the US Dollar, which has been cooled by signs of slowing US inflation.

As a result, the USD/JPY pair saw modest intraday losses in the European session but managed to hold above the 159.00 mark and remain close to its two-week high set the previous day. The Yen's price was also influenced by the BoJ's expected aggressive interest rate hikes.

However, the downside for the USD is cushioned as traders still expect a greater chance of a US Federal Reserve (Fed) rate hike by year-end. Geopolitical uncertainties and economic risks due to energy supply disruptions may also support the safe-haven USD.