USDJPY rises for the second day in a row, hitting a new weekly high.

During the first part of trading on Wednesday. The USDJPY pair finds some upward traction for the second consecutive day. And climbs to a new weekly high. Spot prices, on the other hand, have remained below the mid-147.00s during the early European session as traders eagerly await US consumer inflation numbers before putting new directional bets.

The upside is still limited as USDJPY traders await the US CPI before making further directional bets.

The important US CPI data is set to be released later in the early North American session. It will have a significant impact on the Federal Reserve’s (Fed) policy outlook. This, in turn, will fuel USD demand and assist investors in determining the USDJPY pair’s near-term trend. Meanwhile, rising consensus that the Fed would maintain interest rates higher for an extended period of time helps the USD attract some purchasing and works as a tailwind for the major.

USDJPY Investors are persuaded that the US central bank would maintain its hawkish posture. And their predictions were reinforced by positive US macro data released last week. Which indicated a healthy economy. Furthermore, the recent rise in crude oil prices has fueled concerns about the inflation outlook. And raised the potential of further Fed policy tightening. The Prognosisremains supportive of rising US Treasury bond rates and continues to sustain the buck.

The Japanese Yen (JPY) is being pulled down by lower domestic data. Which shows that annual wholesale inflation. As measured by the Corporate Goods Price Index (CGPI), decreased in August for the eighth consecutive month. The indicator continued to fall from a high of 10.6% year on year in December. Settling at 3.2% in the reporting month. The data guarantees that the Bank of Japan (BoJ) will retain the current policy until next summer.

The Fed-BoJ policy divergence continues to serve as a tailwind and remains favorable.

This, along with the fact that the quick market reaction to Bank of Japan Governor Kazuo Ueda’s weekend comments on negative interest rate policy was brief. Implies that the route of least resistance has been chosen. The USDJPY currency pair is rising. As a result, a following move up towards the YTD high, around the 147.85 level reached last Friday. Appears to be a strong possibility. Furthermore, every corrective downturn may be viewed as a purchasing opportunity and hence stay confined.