The USD/JPY pair builds on its intraday positive move and climbs to the 134.65-134.70 area, or a four-day high during the early North American session.
The US dollar is prolonging its recovery from over a one-month low touched in the aftermath of the softer US CPI report and gaining traction for the third successive day on Tuesday. The momentum pushes the buck to a fresh monthly peak and acts as a tailwind for the USD/JPY pair.
The recent hawkish remarks by several Fed officials suggest that the US central bank would stick to its policy tightening path. This, along with a pickup in the US Treasury bond yields, continues to underpin the USD and remain supportive of the USD/JPY pair’s strong move up.
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The prevalent cautious market mood – amid growing worries about a global economic downturn – extends some support to the safe-haven JPY. This might turn out to be the only factor that might hold back bulls from placing fresh bets and cap any further gains for the USD/JPY pair.
Traders might also prefer to move on the sidelines ahead of the FOMC minutes, scheduled for release on Wednesday. Investors would look for clues about the possibility of a 75 bps rate hike in September, which would influence the USD and provide a fresh directional impetus to the USD/JPY pair.
Source- FxStreet