Japanese Yen gained ground on Thursday, snapping a two-day losing skid.

On Thursday, the Japanese Yen (JPY) attracts some buyers and reverses some of the previous day’s significant losses. Bringing it closer to the monthly low against the US Dollar (USD). Any real appreciation. However, appears difficult amid predictions. That the Bank of Japan (BoJ) will maintain its ultra-dovish monetary policy setting in the aftermath of Japan’s terrible earthquake.  Furthermore, declining Tokyo inflation rates and lackluster wage statistics confirm speculations that the Bank of Japan would not depart the negative interest rate regime anytime soon.

USD bulls are on the defensive as a result of the Fed rate cut uncertainty, which supports the JPY.

This, combined with a positive risk tone, with Japan’s Nikkei 225 reaching a new 34-year high, limits gains for the safe-haven JPY. Traders may also avoid from placing new directional bets ahead of the release of US consumer inflation data later in the North American session. The critical US Consumer Price Index (CPI) report should provide clarity on the Federal Reserve’s (Fed) rate-cut path, which will fuel USD demand and influence the USDJPY pair’s near-term trend. Meanwhile, some repositioning trade keeps USD bulls on the defensive and helps the JPY. Despite the fact that the fundamental background shows that the currency pair’s path of least resistance is to the upward.

Daily Market Movers: Japanese Yen lacks bullish conviction amid expectations of BoJ inaction in January.

On Thursday, the Japanese Yen attracts some buyers as traders reduce their negative wagers and prefer to wait for the new US consumer inflation numbers later in the North American session.

The subject line The CPI in the United States is forecast to grow 0.2% in December, raising the yearly rate to 3.2% from 3.1%, while the core index (excluding food and energy prices) is expected to fall to 3.8% YoY from 4.0% before.

The vital inflation figures will have a significant impact on the Fed’s future policy. Decisions made under uncertainty about when the first interest rate decrease will fuel US Dollar demand in the short run.

Traders may hold off on placing new directional bets ahead of the critical US CPI report.

Japan’s Labour Ministry said on Wednesday that inflation-adjusted real earnings declined 3.0% year on year in November, while nominal pay climbed by 0.2%, the worst rate in nearly two years.

Tokyo’s core CPI decelerated to 2.1% year on year in December. Matching a low reached in June 2022, depressing optimism for a hawkish pivot by the Bank of Japan, according to data released on Tuesday.

Wage developments and inflation forecasts are important concerns for the Bank of Japan. As it considers ending its negative interest rate policy.

Mathias Cormann, Secretary-General of the Organization for Economic Cooperation and Development (OECD) stated. That There is room for the Bank of Japan to reconsider the extent of monetary policy tightening as a result.

In its quarterly evaluation of Japan’s regional economies. The Bank of Japan raises the assessment for two. Lowers the assessment for one, and keeps the assessment for six of the country’s nine regions.

A generally upbeat tone in the equity markets could erode the JPY’s relative safe haven reputation. Limiting any major fall for the USDJPY pair ahead of the main US data risk.