The US Dollar has gained on Tuesday ahead of a much-anticipated Federal Reserve meeting that can give a signal of change in the outlook for U.S. monetary policy. The U.S. currency has been buoyed as traders closed short positions before the Fed’s two-day policy-setting confab, which kicks off on Tuesday. So far Fed officials, led by Chair Jerome Powell, have stressed that rising inflationary pressures are transitory and ultra-easy monetary settings will stay in place for some time to come.

The Bank of Japan is about to extend a September deadline for its pandemic-relief programme at this week’s policy meeting, former BOJ board member Makoto Sakurai said. The Japan government is considering placing Tokyo under state of emergency during the Olympics, given that a number of health experts have expressed concern over a potential spike in COVID-19 cases, according to government officials. The Olympics are due to begin July 23, but public fears persist about a surge of coronavirus infections triggered by an influx of people into the capital and driven by more contagious variants.

Prime Minister Yoshihide Suga will convene a task force meeting as early as Thursday to make a decision on whether to end the third state of emergency. Attention is focused on what the government and the organizing committee of the games will do regarding spectators after those from overseas were barred in March. Since late April, Tokyo has been under a stricter state of emergency, but it will likely end on June 20 as a fourth wave of infections has somewhat abated. In addition to Tokyo, nine prefectures including Hokkaido, Osaka and Fukuoka are currently under the emergency.

Mean while opposition parties submitted a no-confidence motion against the Cabinet of Prime Minister Yoshihide Suga, as the ruling coalition has rejected their calls for extending the current regular parliamentary session.  “Prime Minister Suga’s Cabinet has no sense of responsibility or crisis in protecting the lives and livelihoods of people from coronavirus infections, deemed the greatest crisis of the postwar era,” Edano told a news conference after the meeting.

USD/JPY 4 Hour Chart:

Support: 109.75 (S1), 109.43 (S2), 109.25 (S3).

Resistance: 110.24 (R1), 110.41 (R2), 110.74 (R3).

Amidst the lack of necessary steps by Japanese Government and spread of virus has made the yen weaker against the US dollar. We expect a bullish trend for USD/JPY.