USD/JPY looks to approach 150.00 on the stronger US Dollar

• USD/JPY extends the gains for a second trading session on the upbeat US Dollar.
• Japan’s ruling LDP won the lower house seat but faced defeat in the House of Councilors poll in by-elections.
• Greenback strengthens on the back of higher US Treasury yields.

USD/JPY trades higher near 149.90 during the Asian session on Monday. The pair receives upward support following the comments from Bank of Japan (BoJ) Governor Kazuo Ueda on Friday.

BoJ Governor Kazuo Ueda reiterated that the central bank remains steadfast in its commitment to achieve a 2% inflation target in a stable and sustainable manner. This objective is complemented by a focus on wage growth, and Ueda emphasized that the current accommodative policy will be maintained with patience.

In terms of political developments in Japan, there were two by-elections on Sunday for a lower house seat and an upper house seat. The ruling Liberal Democratic Party (LDP) secured victory in the lower house (House of Representatives) seat but faced defeat in the House of Councilors poll, which was claimed by an opposition-backed independent candidate.

However, approval ratings for Japanese Prime Minister Kishida’s Cabinet have plummeted to their lowest levels since he assumed power in October 2021. Speculation had been circulating that Kishida might dissolve the lower house and call a general election by the end of the year if the LDP won both seats.

Furthermore, traders are concerned about the potential for Japan to intervene to counter a prolonged depreciation in the JPY, which could limit the advance of the USD/JPY pair.

US Dollar Index (DXY) snaps the recent losses, possibly supported by robust economic data from the United States (US). The spot price bids higher around 106.30 at the time of writing.

Additionally, the upbeat US Treasury yields provide support in underpinning the US Dollar (USD), with the 10-year US Treasury yield standing at 4.98%, up by 1.30%, by the press time.

Federal Reserve (Fed) Chairman Jerome Powell mentioned during the previous week that the central bank has no plans to raise rates. Powell also emphasized that further tightening of monetary policy is possible on further signs of growth.

Atlanta Fed President Raphael Bostic said on Friday that the Federal Reserve is unlikely to lower interest rates before the middle of next year. Fed Philadelphia President Patrick Harker reiterated his inclination to maintain unchanged interest rates.

Moreover, Fed Cleveland President Loretta Mester stated that the Fed is “at or near the peak of the rate hike cycle.” However, Mester also acknowledged that the data released during the previous week could impact the central bank’s decision regarding the future of monetary policy.

Investors will closely monitor the US S&P Global PMI on Tuesday, followed by the Q3 Gross Domestic Product (GDP) on Thursday. Japan’s Consumer Price Index will be eyed on Friday.