USD/JPY Sees Sharp Decline Amid Growing Expectations of U.S. Rate Cuts

The USD/JPY pair experienced a significant decline during Wednesday's trading session, falling by nearly 1% to around 151.50, marking its lowest point in three weeks, since November 6. This decline aligns with increasing market expectations for a potential reduction in U.S. interest rates at the Federal Reserve's upcoming meeting in December.

The drop in the USD/JPY pair was largely driven by the weakening of the U.S. dollar, which saw a 0.34% drop in its index, currently trading at 106.51. This movement follows the results of the Federal Reserve's meeting on Tuesday, which reaffirmed the central bank's cautious and gradual approach to rate cuts.

These developments have intensified expectations for another rate cut in the near future. According to the FedWatch tool, the likelihood of a 25 basis point rate reduction has risen to 66.3%. In contrast, the probability of keeping rates unchanged has decreased to 33.7%. This shift in expectations has negatively impacted the U.S. dollar, contributing to the ongoing decline in the USD/JPY pair, which is now trading around 151.78.

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