• USD/JPY extends downside around 146.05 in Tuesday’s early Asian session.
• Rising bets on Fed rate cuts in September exert some selling pressure on the USD and drag the pair lower.
• The hawkish BoJ remains supported by the JPY against the USD. 

The USD/JPY pair trades in negative territory for the third consecutive day near 146.05 during the Asian trading hours on Tuesday. The downtick of the pair is backed by a weaker US Dollar (USD) broadly. Traders will keep an eye on Japan’s National Consumer Price Index (CPI) for July and Federal Reserve (Fed) Chair Jerome Powell’s speech on Friday. 

Meanwhile, the USD Index (DXY), a measure of the value of the Greenback relative to a basket of foreign currencies, drops to a multi-day low around 101.85, which creates a headwind for USD/JPY. Investors see the US Fed to start easing the policy in September. According to the CME FedWatch Tool, the markets are now pricing in a nearly 77% chance of a 25 basis points (bps) rate cut in September and expect a 200 basis points (bps) reduction in the next 12 months, though that will depend on incoming data.