• The Japanese Yen continues to lose ground following the dovish remarks from BoJ Deputy Governor Shinichi Uchida.
• BoJ’s Uchida emphasized that the central bank must maintain its current level of monetary easing for the time being.
• CME FedWatch tool suggests 67.5% odds of a 50-basis point Fed rate cut in September, up from 13.2% last week.

The Japanese Yen (JPY) extends its losses against the US Dollar (USD) for the second successive day. This downside could be attributed to the comments from Bank of Japan (BoJ) Deputy Governor Shinichi Uchida on Wednesday, “We won’t raise rates when markets are unstable,” according to Reuters.

Deputy Governor Uchida also noted that the BoJ's interest rate strategy will adapt if market volatility alters economic forecasts, risk assessments, or projections. Given recent market volatility, he emphasized the need for careful monitoring of the economic and price impacts of their policies, stating, “We must maintain the current degree of monetary easing for the time being.”

The upside potential for the USD/JPY pair may be limited as the US Dollar faces challenges, with markets anticipating a more substantial rate cut beginning in September. According to the CME FedWatch tool, there is now a 67.5% probability of a 50-basis point (bps) interest rate cut by the US Federal Reserve (Fed) in September, up from 13.2% a week earlier.