USD/JPY declines to near 147.30 as US Dollar falls, Fed-BoJ policy eyed

• USD/JPY trades lower around 147.30 as the US Dollar underperforms its peers.
• The Fed is certain to cut interest rates this week, while the BoJ is expected to hold them steady.
• The BoJ might keep the door open for further monetary policy tightening.

The USD/JPY pair falls sharply to near 147.30 during the European trading session on Monday. The pair faces selling pressure as the US Dollar (USD) underperforms its peers amid firm expectations that the Federal Reserve (Fed) will start the monetary-easing campaign on Wednesday.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, trades 0.2% lower to near 97.40.

According to the CME FedWatch tool, traders have fully priced in an interest rate reduction by the Fed in the policy meeting on Wednesday.

Fed dovish speculation has been intensified due to escalating United States (US) labor market risks. A report from Morgan Stanley also showed that the Fed will cut interest rates in each of its monetary policy meetings remaining this year amid slowing job demand.

This week, investors will also focus on the US Retail Sales data for August, which is scheduled for Tuesday. The Retail Sales data is expected to have grown at a moderate pace of 0.3%.

Going forward, the major trigger for the Japanese Yen (JPY) will be the Bank of Japan's (BoJ) monetary policy announcement on Friday. The BoJ is expected to keep interest rates on hold at 0.5%, while keeping the door open for more interest rate hikes.