• The Japanese Yen hovers around its 38-year low of 161.28.
• The JPY may limit its downside due to possible intervention by Japanese authorities.
• The US Dollar struggles as recent inflation data raise expectations of Fed rate cuts in 2024.

The Japanese Yen (JPY) remains tepid on Monday near its lowest level of 161.28 since 1986. However, its downside seems limited as an upbeat Japan’s business confidence data lifted market sentiment. Additionally, the expected speculations about an imminent intervention by Japanese authorities support the JPY.

Japan’s Tankan Large Manufacturing Index rose to 13 in the second quarter from the previous reading of 11. The index hit the highest level in two years amid an improving economic outlook. Meanwhile, Japan’s Jibun Bank Manufacturing PMI for June was revised slightly lower to 50 from a preliminary reading of 50.1 but remained expansionary for the second straight month.

The US Dollar (USD) depreciates as recent inflation data raises expectations of the US Federal Reserve’s (Fed) deducting interest rates in 2024. The CME FedWatch Tool indicates that the likelihood of a Fed rate cut in December by 25 basis points has increased to nearly 32.0%, up from 28.7% a week earlier.