Japanese yen continues on the front foot against USD, but lacks follow through buying.

The Japanese yen (JPY) is supported by a number of factors as it heads into the European session on Monday. Maintaining its slight intraday gains against the US dollar (USD). A shift in global risk sentiment. Along with verbal intervention by Japanese authorities. Delivered a little boost to the safe-haven JPY. Aside from that, a slight US Dollar (USD) downtick pushes the USDJPY pair away from a two-month top reached by A precious day.

The higher-than-expected US CPI maintains hawkish Fed predictions and supports USD bulls.

Any major USD correction from its highest level since November 14 is elusive in light of expectations that the Federal Reserve (Fed) would hold interest rates higher for longer. Supported by a better US CPI report on Tuesday. The hawkish stance continues to support elevated US Treasury bond yields, increasing the US-Japan rate differential, which should cap the JPY and further restrict the downside for the USDJPY pair.

Daily Market Movers: Japanese Yen maintains advances despite intervention worries, lacking follow-through.

The Japanese Yen pared Tuesday’s post-US CPI drop to a three-month low after Japan’s top currency diplomat Masato Kanda repeated that authorities are prepared to intervene in the foreign exchange market if necessary.

Japan’s Finance Minister, Shunichi Suzuki, stated that rapid FX movements are undesirable.

Furthermore, Japan’s Finance Minister, Shunichi Suzuki, stated that rapid FX movements are undesirable. And that the government is closely monitoring the market, but made no mention of action.
According to Bloomberg. No politicians, government officials, bankers, or business leaders have expressed strong opposition to Bank of Japan Governor Kazuo Ueda’s proposal to raise interest rates for the first time since 2007.
A stronger than expected US inflation report tempered hopes. For the Federal Reserve’s more aggressive rate cutting cycle, pushing US Treasury bond yields higher. And dampening investors’ desire for riskier assets.
On Tuesday, the Labor Department’s Bureau of Labor Statistics reported. That the headline US CPI grew by 0.3% in January. Up from 0.2% the previous month and softening to 3.1%.YoY rate increased from 3.4% in December.
The number was higher than market expectations of 2.9%. And it was backed by a better Core CPI print. Which jumped 3.9% in the reporting month. Matching December’s gain and exceeding expectations of 3.7%.
Japanese yen Investors have all but priced out a March rate cut, and the likelihood of a move in May has dropped to approximately 35% from over 60% the day before, with the Fed now likely to begin decreasing rates at its June policy meeting.
The yield on the benchmark 10-year US government bond rose to its highest level since December 1 and pushed the US Dollar to a three-month high, bolstering expectations for further appreciation in the USDJPY pair.