Japanese yen gains some support from renewed speculations on an eventual BoJ policy reversal.

On Tuesday, the Japanese Yen (JPY) rose somewhat against the US dollar, supported by slightly higher-than-expected domestic consumer inflation numbers. In reality, Japan’s core CPI outperformed expectations. Reigniting hopes that the Bank of Japan (BoJ) may terminate negative interest rates soon. Providing a modest boost to the JPY. The increase, however, lacked bullish conviction amid forecasts of a recession in Japan. Force the Bank of Japan to postpone its intentions to tighten monetary policy. This, in turn, helped the USDJPY pair attract some dip buyers near the crucial mark of 150.00. And maintain stable during the Asian session on Wednesday.

The approaching US government shutdown weakens the dollar and appears to cap USDJPY.

Meanwhile, the US Dollar (USD) continues to struggle to gain traction in the face of a possible government shutdown. And weakening US durable goods orders. The downside, however, is cushioned by predictions that the Federal Reserve (Fed) would wait until the June policy meeting to decrease interest rates in the face of persistently high inflation and a resilient US economy. Traders may also prefer to wait for the release of the US Personal Consumption Expenditures (PCE) Price Index on Thursday for indications on the Fed’s Rate reduction route. This, in turn, limits the upside for the USDJPY pair and suggests prudence before preparing for further gains.

Daily Market movers: Japanese yen bulls appear uncommitted under BoJ policy uncertainty.

The Japanese yen is struggling to capitalise on Tuesday’s somewhat warmer domestic consumer inflation-inspired advances, owing to uncertainties about the Bank of Japan’s policy outlook.
The latest CPI data revealed that inflation remains sticky even in Japan, fueling expectations that the BoJ will eventually abandon its ultra-accommodative monetary policy settings.
Japan’s economy unexpectedly entered a recession in the fourth quarter, perhaps forcing the central bank to postpone its plan to abolish negative interest rates in the coming months.
US President Joe Biden underlined the importance of Finding a way to avoid a damaging government shutdown on March 1 as a congressional impasse showed no signs of abating.
The US Census Bureau said on Tuesday that Durable Goods Orders fell 6.1% in January, the highest in nearly four years and worse than the expected loss of 4.5%.
The Conference Board’s Consumer Sentiment Index dipped to 106.7 in February, despite a drop in inflation predictions for the next year to their lowest level in over four years.
The Federal Reserve Bank of Richmond’s manufacturing index fell for the fourth consecutive month in February, although improved to -5 from -15 the previous month.
Aside from that, a minor decrease in US Treasury bond yields retains the US Dollar bullish.
On Wednesday, the USDJPY pair is expected to be under pressure due to a defensive market.

The preliminary US Q4 GDP may provide some encouragement ahead of the PCE Price Index on Thursday.

Traders are now anticipating the release of the preliminary US Q4 GDP report. Which, together with remarks by prominent FOMC members, will increase USD demand. And offer a new impetus.
The attention, however, will remain on the US Personal Consumption Expenditures (PCE) Price Index on Thursday. Which may provide new clues regarding the Fed’s rate-cutting path.