USD/JPY seems vulnerable near YTD low, around mid-140.00s ahead of Fed/BoJ meetings this week

• USD/JPY languishes near the YTD low amid the divergent Fed-BoJ policy expectations. 
• Bears might refrain from placing fresh bets ahead of this week’s central bank event risks.
• The Fed will announce its decision on Wednesday, followed by the BoJ update on Friday.

The USD/JPY pair remains depressed around mid-140.00s during the Asian session on Monday, amid thin trading volumes on the back of a holiday in Japan and seems vulnerable near the YTD low touched last week. Bearish traders, however, might prefer to wait for this week's key central bank event risks before positioning for any further depreciating move. 

The Federal Reserve (Fed) is scheduled to announce its decision at the end of a two-day meeting on Wednesday, which will be followed by the Bank of Japan (BoJ) policy update on Friday. In the meantime, the divergent Fed-BoJ policy expectations led to the recent unwinding of the Japanese Yen (JPY) carry trades and continue to exert some downward pressure on the USD/JPY pair. 

The markets started pricing in a greater chance of an oversized, 50 basis points (bps) rate cut by the US central bank after the US CPI and PPI report released last week pointed to signs of easing inflationary pressures. In contrast, the recent hawkish remarks by BoJ officials reaffirmed market bets that the Japanese central bank will announce another interest rate hike by the end of this year. 

This, in turn, suggests that the path of least resistance for the USD/JPY pair remains to the downside and supports prospects for an extension of a well-established downtrend witnessed over the past two months or so. That said, a generally positive risk tone could cap any meaningful gains for the safe-haven JPY and hold back bulls from placing fresh bets in the absence of any relevant macro data.