• USD/JPY dipped below the 141.50 zone, hitting a daily low of 141.28. 
• Stealth intervention by the BoJ gives the JPY traction.
• Cautious market mood amid PBoC rate cut to limit the Yen upside potential.

The USD/JPY fell to negative territory losing over 40 pips below the 141.50 area as the Yen gained interest as markets anticipated a Bank of Japan’s (BoJ) stealth intervention. However, the Japanese currency remains vulnerable amid the rate cuts announced by the People Bank of China (PBoC), which fueled global economic downturn worries.

Economists and investors anticipate a BoJ intervention to bolster the Yen

A Reuters poll revealed that a majority of economists believe Japan's government and the BoJ are likely to take action if the Japanese Yen experiences a decline and reaches the 145 per U.S. Dollar level. In that sense, markets will look for any clues regarding the potential intervention on the release of the June BoJ’s meeting minutes, set to be released in the early Asian session on Wednesday.

On the other hand, during the Asian session, the People's Bank of China announced a decrease in the benchmark Loan Prime Rates (LPRs) by 10 basis points (bps). This decision resulted in the one-year LPR declining from 3.65% to 3.55%, while the five-year LPR was reduced from 4.30% to 4.20%. These rate cuts served as a reminder to investors of the sluggishness observed in Chinese economic activity, and as China is a big trading partner from Japan, the JPY is set to remain vulnerable.

On the US Dollar side, the Greenback gained traction on the back of upbeat housing market data. The US Census Bureau's May Housing Starts data surpassed expectations with a significant increase of 21.7%, outperforming the anticipated 0.8% decline. Similarly, Building Permits for the same month exceeded consensus by rising 5.2% instead of the expected 5% and helped the USD hold its ground as the DXY index trades with gains at the 102.75 area.

Focus now shifts to Chair Powell’s testimony before the US Congress on Wednesday’s session, where market participants will look for clues regarding the next steps of the Federal Reserve (Fed) monetary policy