Yen declined on Tuesday against dollar for the third straight session to 24-year lows at 136, opening the door for questions about a collapse towards 140.

Let's explore the factor behind yen's collapse to answer these questions.

We'll then predict future behavior for the yen against major rivals amid monetary policy variance in Japan and the US.

USD/JPY rose 0.8% to 136.03, the highest since October 1998, after yen lost another 0.1% yesterday, the second loss in a row, following a 2.1% tumble on Friday.

BoJ

Bank of Japan's policymakers voted to hold rates at minus 0.10% at the June 16-17 meeting, as expected by most analysts.

BoJ Governor Haruhiko Kuroda said the Bank is ready to even make policies easier and more accommodative if necessary,

Kuroda is expecting inflation to hover near 2% for the time being and thus there's no need to tighten policies under such conditions. 

US Yields

After the Federal Reserve's historic decision to hike rates by 75 basis points to 1.75%, the highest increase since 1994, yields moved rapidly. 

US 10-year treasury yields rose 1.2% on Tuesday for the third straight session on track to hit 11-year highs at 3.5%.

Higher yields obviously support the dollar against major rivals and especially the yen.

Estimates

Now analysts expect a new moving target for the yen towards 138, and even 140 is on the table now. 

Gold prices declined in European trade for the third straight session as US 10-year yields rally, pressuring the precious metal.

Gold is also pressured by ongoing efforts by global central banks to tighten policies to combat inflation.

Gold prices fell 0.3% to $1,832 an ounce, after losing 0.2% yesterday, the second loss in a row. 

US Yields 

US 10-year treasury yields rose 1.2% on Tuesday for the third straight session on track to hit  11-year highs at 3.5%. 

Higher yields pressure precious metals such as gold as they are unyielding. 

Global Central Bank

Global central banks are still moving to control inflation and prices, with Bank of England hiking rates by 25 basis points to 1.25%, the fifth such increase in a row.

Swiss Central Bank decided to hike rates by 50 basis points at the June 16 meeting to minus 0.25%, the first such increase since 2007, while analysts expected no change at minus 0.75%.

Higher interest rates weaken demand on gold prices as it becomes less attractive as an investment.

The SPDR

Gold holdings at the SPDR Gold Trust remained flat at 1,075 tones, the highest since May 9. 

Euro rose in European trade against dollar for another session following remarks by ECB President Christine Lagarde ahead of Parliament. 

The greenback is extending its decline off 20-year highs against major rivals on active profit-taking ahead of Fed Chair Jerome Powell's Congressional testimony.

EUR/USD rose 0.6% today to 1.0578, after rising 0.2% yesterday, the fourth profit in five days.

Lagarde

ECB President Christine Lagarde said the ECB doesn't expect a recession in the euro zone but must take precautions against it.

Lagarde pointed to the Ukrainian crisis as the ongoing cause for inflation, and asserted the central bank must work to coordinate monetary policies better in European countries.

European Rates

Now markets fully expect the ECB to hike rates by 25 basis points in July, and by a similar amount in September.

The Dollar

The dollar index fell 0.5% on Tuesday for another session on profit-taking off 20-year highs against major rivals. 

The dollar lost ground amid doubts the Fed might ever hike rates by 75 basis points once more this year.

Markets also await Fed Chair Jerome Powell's Congressional testimony this week to gather more clues on the future of monetary policy. 

Industrial metals prices tiled higher in Asian trade as the dollar index slipped off December 2002 highs, ahead of US data later today while markets price in latest developments about China.

Silver futures due in September rose 0.56% to $21.64 an ounce, off May 16 lows for the fifth session.

Copper futures due in September rose 0.26% to $4.008 a pound, off August 2021 lows.

Palladium prices rose 0.91% to $1,870 an ounce, while platinum spot prices rose 0.29% to $938 an ounce.

Aluminum futures rose 1.16% to $2,527 a tone, while Zinc fell 0.17% to $3,517.

From the US, existing home sales are expected down to 5.40 million, after falling 2.4% to 5.61 million in April.

Recent Chinese data showed copper imports rose 15% to 31,267 tones, while palladium imports rose 19% to 769 kilos, as Nickel imports fell 90% to 300 tones.

Latest World Health Organization data showed Covid 19 infections rose to over 535 million cases, with the death toll mounting to 6.314 million so far.

On the Ukrainian crisis, the Kremlin said the negotiations with Ukraine aren't going very well, especially after aggressive remarks by the Ukrainian government recently on the Crimean Bridge.

Ukrainian government asserted a goal to take back the Crimean Bridge once it acquire weaponry from the US and Europe.

The dollar index fell off December 2002 highs by 0.10% to 104.34, with a session-low at 104.22.