• The downside of the Japanese Yen could be restrained by safe-haven flows amid Middle East tensions.
• Japan's parliament will hold a special session to discuss the BoJ’s last interest rate hike.
• CME’s FedWatch Tool suggests odds of a 50 basis points cut by the Fed in September have dropped to 50%.

The Japanese Yen (JPY) extends its losses against the US Dollar (USD) on Tuesday. The safe-haven flows might limit the downside for the Yen, which could be attributed to rising geopolitical tensions in the Middle East.

Japan's parliament is scheduled to hold a special session on August 23 to discuss the Bank of Japan's (BoJ) decision to raise interest rates last month. The session, organized by the lower house financial affairs committee, is expected to invite BoJ Governor Kazuo Ueda to attend, according to government sources cited by Reuters.

The USD/JPY pair receives support as the pressure on the US Dollar eases due to decreased expectations for a 50 basis point interest rate cut by the US Federal Reserve (Fed) in September. According to CME’s FedWatch Tool, the probability of 50 basis points (bps) cut in September has dropped to 50%, down from 85% last week. However, the rate markets continue to price in a 100% chance of at least a 25 bps cut at the upcoming meeting.