The Japanese yen has been bolstered by predictions that the Bank of Japan (BoJ) may adopt a more stringent monetary policy, including ending foreign currency holdings, which could continue to support the yen.

Additionally, the yen might benefit from increased geopolitical tensions in the Middle East, following an Israeli airstrike on Sunday that targeted two schools, resulting in at least 30 deaths.

On the other hand, the US dollar faces pressure after labor market data showed a rapid slowdown, leading to increased expectations that the Federal Reserve will cut interest rates in September. CME’s FedWatch tool indicates a 74.5% chance that the Fed will cut rates by 50 basis points.

Source: Fxstreet