On Wednesday, the USD/JPY pair makes a little upward movement and moves back toward the top of its weekly range, although the intraday rise lacks positive conviction.
Through the early European session, the pair remains stable below the mid-132.00s and is impacted by a number of opposing forces.
The safe-haven Japanese Yen is weakened by an overall upbeat atmosphere in the equities markets, which also provides some support for the USD/JPY pair.
The Federal Reserve is expected to temper its aggressive position, which is why fresh US Dollar selling has emerged and is capping the rise. The statistics from last week, which revealed US wage growth in December and suggested indications of reducing inflationary pressures, helped the bets.
Meanwhile, traders are hesitant to make risky wagers. They would rather wait until Thursday, when the US consumer inflation statistics will be released.
The key US CPI data could shed some light on whether the Fed will need to raise its target rate over 5% in order to reduce inflation that has been persistently high.
In turn, this will have a significant impact on the dynamics of the USD price in the short term and aid in determining the direction of the USD/JPY pair.
In the interim, if there are no pertinent market-moving US data releases, the rates on US bonds may determine the demand for the USD.
In addition, the general risk climate will be examined for potential short-term trading opportunities around the USD/JPY pair. The underlying background, however, implies that the way forward for spot prices is to likelihood of getting sold into the downturn and any significant gain is higher.
