• The Japanese Yen struggles to build on the previous day’s solid recovery from a multi-decade low.
• The divergent BoJ-Fed policy expectations and a positive risk tone undermine the safe-haven JPY.
• The emergence of some USD buying provides an additional boost to the USD/JPY pair on Tuesday. 

The Japanese Yen (JPY) staged a strong intraday recovery on Monday and rallied over 550 pips against its American counterpart, following an initial slump below the 160.00 psychological mark for the first time since April 1990. Traders cited intervention by Japanese authorities for the first time in 18 months as a trigger for the solid rebound in the JPY amid relatively thin liquidity due to a local public holiday. This, along with the emergence of fresh US Dollar (USD) selling, dragged the USD/JPY pair to a one-week low.

The JPY, however, started losing traction in the wake of expectations that interest rates in Japan would remain low for some time in contrast to relatively high-interest rates in the United States (US). This, along with a generally positive risk tone, which tends to undermine the safe-haven JPY, assisted the USD/JPY pair in attracting fresh buyers in the vicinity of mid-154.00s and trimming a part of its heavy intraday losses. The momentum extends through the Asian session on Tuesday and is further fueled by rather unimpressive Japanese macro data.

The focus, meanwhile, remains on the outcome of the crucial two-day FOMC policy meeting, scheduled to be announced on Wednesday. Furthermore, this week's important US macro releases, including the closely watched Nonfarm Payrolls (NFP) on Friday, will influence the USD and provide some meaningful impetus to the USD/JPY pair. In the meantime, Tuesday's US economic docket – featuring the Chicago PMI and the Conference Board's Consumer Confidence Index — will be looked upon to grab short-term trading opportunities.