USD/JPY Records Moderate Gains But Loses It

USD/JPY recorded moderate gains during the early hours of today (Friday). This saw the pair recovering some losses due to a CPI-induced dip towards 140.20. Nevertheless, the in-day uptick failed around 142.00s and the USD/JPY pair gave up most of its in-day gains, as it falls below 141.00 in the first part of the European session.

The United States dollar fell to its lowest depth in the last three months (August). Consequently, this became the downward pressure that caused the USD/JPY loss. Also, the new United state consumer inflation data was published yesterday (Thursday) and it portrayed that post-pandemic inflation is over. Subsequently, this affirms that the Federal Reserve will reduce the speed of policy tightening in subsequent months. As a result, this possibility keeps burdening the USD.

Additionally Happenings in the USD/JPY Market
At this point, indications that the Feds may dictate a 50 bps in December is 80% against the chances of a 56.8% before the United States CPI was published. Additionally, anticipations for a high-interest rate fell to 5%, and this is evident from a further downslide in the United States Treasury bond yields.  The reduction in the United States – Japan differentials further supports the JPY, which is one of the causes of the decline in the USD/JPY price. Consequently, this has caused the pair has lost about 170 pips today.

Having said this, the dominant market risk sentiment as portrayed by the powerful uptrend in the equity market, may restrict Traders from making aggressive predictions about the haven Japanese yen. Also, a relaxed monetary policy adopted by the Bank of Japan may reduce the selling pressure around the USD/JPY pair.

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