Dollar into Yen Ahead of Key Japanese Inflation Release

The USD/JPY pair showed stability as traders awaited the release of a crucial Japanese inflation indicator, the Tokyo Core CPI. With the yen trading at 144.19, a slight decline of 0.20% from the European session, all eyes were on the symbolic 145 lines, which continued to face pressure.

Governor Ueda reiterated that there would be no changes to monetary policy unless there was a significant rise in core inflation. Despite headline inflation surpassing 3%, core inflation remained below the Bank of Japan’s 2% target. The central bank’s ultra-easy monetary policy would persist unless inflation accelerated substantially by 2024, Ueda emphasized.

Potential Verbal Intervention and Weakening Bullish Momentum

The widening gap between the monetary policies of the Federal Reserve and the Bank of Japan continued to put pressure on the yen. Speculation about possible intervention to support the currency arose as USD/JPY approached the significant 145 level. However, traders remained cautious due to verbal intervention risks that could change the pair’s direction and impact existing long positions.

Despite the ongoing upward trend of USD/JPY, technical indicators suggested caution. The Relative Strength Index (RSI) indicated overbought conditions, although it remained below extreme readings. Traders were monitoring the RSI’s approach to the 80 levels, which could signal a potential reversal.

Japanese Yen to Dollar Pair Extends Gains, But Verbal Intervention Looms

Yen conversion continued its upward momentum for the sixth consecutive day, reaching a new year-to-date high of 144.61. However, as the Asian session began, the pair retraced slightly ahead of the Tokyo Open. Traders remained watchful for possible verbal intervention from Japanese authorities, which could impact the pair’s trajectory.

Overall, the Dollar into Yen pair maintained a steady stance as market participants eagerly awaited the release of the Tokyo Core CPI and closely monitored Governor Ueda’s comments on monetary policy. The currency pair’s movement around the symbolic 145 lines and the potential for intervention added to the market’s anticipation and cautious sentiment.