USD/JPY slipped to around 151.20 after the Bank of Japan’s Meeting Minutes were released.

The currency pair extends its decline as the Bank of Japan (BoJ) indicates a growing likelihood of achieving its inflation target, albeit gradually. BoJ members discussed potential measures to support a positive cycle of wages and inflation, which could bolster the Japanese Yen (JPY).

There’s also talk of potential forex intervention to address excessive weakness in the JPY. Japan’s top currency diplomat, Masato Kanda, has hinted at counteracting excessive JPY weakness.

Meanwhile, the US Dollar Index (DXY) is weakening despite higher US Treasury yields. Despite hawkish comments from Federal Reserve Bank of Atlanta President Raphael Bostic, who revised his earlier forecast of two interest rate cuts to just one due to persistent inflation and robust economic data.

However, the USD may face downward pressure due to expectations of the Federal Reserve initiating an easing cycle, possibly starting in June. Despite recent inflation spikes, the Fed has downplayed concerns, with Chairman Jerome Powell emphasizing that the central bank won’t rush to react to short-term inflation fluctuations.

USD/JPY