USD/JPY Pauses as Dollar Support Remains Robust Amid Rate Hike Expectations

The U.S. dollar's support remains robust despite a temporary pullback in the USD/JPY pair, driven by falling U.S. Treasury yields and a weaker U.S. dollar index.

The sell-off in U.S. Treasuries has eased, prompting a pullback in the USD/JPY pair, while Brent crude has fallen below $100 per barrel, contributing to the dollar's decline.

However, the underlying strength of the U.S. dollar remains unchanged, with investors continuously revising their expectations for major central banks' monetary policies.

The probability of a Fed rate hike in October has risen to 70%, while the odds of an ECB rate increase at the same time stand at just 50%, further widening the divergence between the two central banks' policy stances.