• The Japanese Yen remains on the defensive amid the BoJ’s uncertain policy outlook.
• A positive risk tone also undermines the JPY, though intervention fears limit losses.
• Reduced Fed rate cut bets act as a tailwind for the USD and lend support to USD/JPY.
• Traders now seem reluctant ahead of this week’s key central bank event and data risks. 

The Japanese Yen (JPY) kicks off the new week on a subdued note and remains pinned near a multi-decade trough against its American counterpart during the Asian session. The uncertainty over the Bank of Japan's (BoJ) further policy tightening and easing fears about a further escalation of geopolitical tensions in the Middle East turned out to be key factors undermining the JPY. That said, the BoJ Governor Kazuo Ueda's hawkish rhetoric and fresh warnings by Japanese Finance Minister Shunichi Suzuki against excessive currency market moves help limit deeper JPY losses. 

Traders also seem reluctant to place fresh directional bets ahead of the crucial BoJ policy decision on Friday. Investors this week will also confront the release of important US macro data – the Advance Q1 GDP on Thursday and the Personal Consumption Expenditures (PCE) Price Index on Friday. In the meantime, investors have been pushing back their expectations about the timing of the first rate cut by the Federal Reserve (Fed) to September and downsizing bets for the number of rate cuts this year. This acts as a tailwind for the US Dollar (USD) and the USD/JPY pair.