Understanding why the USD/JPY has taken out 140 and set a new 2024 low today

Since the last update here, the USD/JPY slipped further. The dollar dropped to a new 2024 low earlier at 139.58. It has rebounded off that low now though, but at the time of writing yet to reclaim that 140 handle. So, the outlook for 140 to get taken out was noted here on Friday and the reason for the further dollar weakness today comes as the markets now price an almost 60% chance of the Fed cutting by 0.50% on Wednesday. At the same time we should not forget; the Bank of Japan is also due to decide on monetary policy this week, on Friday. The markets have yet to change the forecast on that and the OCR is still envisaged to remain on hold, at 0.25%. The firmer Yen in advance of this is right now more about the dollar side of the policy outlook, but can you imagine what might happen if the Fed cuts by 0.50% and the BOJ raises rates at the same time? Perhaps you can think about that for yourself and it is not by any means a set of outcomes advocated here. To be honest with you, the BOJ probably would not like to see the dollar smashed back even more right now. Naturally, if the Fed only cuts 0.25% and the BOJ sit on their hands, then the dollar has room to rebound markedly too. It is just now trading at 139.82