Japanese Yen is expected to extend its overnight recovery from a one-month low against the US dollar.

The Japanese yen (JPY) climbs for the second day in a row versus the US dollar on Friday. Recovering further from a one-month low hit in the aftermath of higher US consumer inflation numbers. The much anticipated US Consumer Price Index (CPI). Together with statements from Federal Reserve (Fed) officials, prompted investors to reconsider the chances of a rate cut In March.

Expectations that the Bank of Japan would maintain its ultra-dovish monetary stance should limit the JPY’s upside potential.

In contrast, the Bank of Japan (BoJ) is expected to postpone its plan to abandon its ultra-dovish posture. In the aftermath of the recent terrible earthquake in central Japan. Decreasing inflation rates in Tokyo, and weak wage data. As a result the JPY may be weakened, limiting any major decrease in the USDJPY pair.

The buck and the USDJPY pair may benefit from dwindling chances of an early Fed rate cut.

Meanwhile, growing market certainty that the Fed would begin easing monetary policy sooner rather than later causes. A new leg down in US Treasury bond yields. Preventing USD bulls from making aggressive wagers. Furthermore, geopolitical dangers associated with the Israel-Hamas conflict, as well as China’s economic troubles, provide some support to the safe-haven JPY and turn out to be positive. be important variables putting pressure on the USDJPY pair. Traders will now look for new impetus in the US Producer Price Index (PPI) and Minneapolis Fed President Neel Kashkari’s speech. Nonetheless, the currency pair is prepared to advance for the second week in a row and remains at the mercy of USD pricing dynamics.

Daily Market Movers: The Japanese Yen is struggling to attract buyers amid diverging BoJ-Fed predictions.

At its meeting on January 22-23, the Bank of Japan is expected to maintain its ultra-loose monetary policy, which is undermining the Japanese Yen.

The announcement of US consumer inflation numbers on Thursday casts doubt. On the Federal Reserve’s decision to lower rates in March, lending some support to the USDJPY pair.

The The Labor Department said on Thursday that the headline US CPI increased 0.3% in the year to December, moving from 3.1% to 3.4%.

Excluding volatile food and energy prices, the core index climbed 0.3% last month. And advanced 3.9% year on year in December, the weakest growth since May 2021.

Expectations of an impending shift in the Fed’s monetary stance push down. US Treasury bond yields and may deter USD bulls from making aggressive wagers.

According to CNN, in response to numerous drone and missile attacks on ships in the Red Sea. US and UK forces carried out attacks against various Houthi targets.

Traders are now looking to the US Producer Price Index (PPI). And Minneapolis Fed President The remarks by Neel Kashkari should generate new energy.

The headline PPI is expected to grow 1.3% year on year in December, up from 0.9% in November. While the core PPI is expected to fall to 1.9% from 2.0% in November.