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USD/JPY Retreats to 163.50 Amid US Dollar Weakness and JPY Recovery

Guavy AI Editorial Team
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USD JPY
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The USD/JPY currency pair has retreated to the 163.50 area after reaching fresh 40-year highs just below 165.00, but the broader bullish trend remains intact.

The decline is attributed to the US dollar's weakness on risk-on markets rather than Japanese yen strength.

The recent JPY recovery is largely due to short-covering of long US dollar positions amid fresh hopes of a peace process in the Middle East, rather than intrinsic yen strength.

Analysts at MUFG warn that without hawkish guidance from the Bank of Japan, the yen remains vulnerable to further weakness, especially if the Federal Reserve delivers a hawkish policy surprise this week.

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