JAPANESE YEN TRADERS SEEM NON-COMMITTED AHEAD OF THIS WEEK'S CRITICAL FOMC POLICY MEETING
- The Japanese Yen is undermined by the weaker Tokyo Core CPI released on Friday.
- The USD holds steady just below the monthly peak and lends support to USD/JPY.
- Traders, however, seem reluctant amid the uncertainty over the Fed’s rate cut path.
The Japanese Yen (JPY) remains on the defensive against its American counterpart at the start of a new week and languishes near a two-month low touched on January 19. Data released on Friday showed that inflation in Tokyo – Japan's capital city – fell below the Bank of Japan's (BoJ) 2% target for the first time in nearly two years and continues to undermine the domestic currency. This, along with the underlying bullish tone surrounding the US Dollar (USD), assists the USD/JPY pair to hold above the 148.00 mark during the Asian session.
Meanwhile, the BoJ last week signalled that it was becoming more convinced to durably achieve the 2% inflation target and lifted bets that a rate hike could happen within months. Apart from this, the prevalent cautious mood around the equity markets should help limit losses for the safe-haven JPY. Furthermore, the USD bulls might refrain from placing aggressive bets and prefer to wait for the FOMC policy decision on Wednesday amid the uncertainty over the timing of the first rate cut. This, in turn, might cap any meaningful upside for the USD/JPY pair
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