The USD/JPY pair saw some buying interest on Thursday, but the upward movement was limited. The US Dollar received support from the Federal Reserve’s hawkish stance, despite softer US CPI data. Traders are cautious ahead of the Bank of Japan’s decision.
The pair edged higher during the Asian session, trading around 156.75-156.80 after bouncing from a multi-day low near 155.70 following weak US consumer inflation numbers. The Fed’s unexpected hawkish outlook on Wednesday boosted the USD, with policymakers anticipating less need for rate cuts this year due to higher inflation projections.
Although the US CPI remained unchanged in May and core CPI dropped to a three-year low, the Fed’s revised outlook is likely to strengthen the USD and support further gains in USD/JPY. However, market participants are hesitant as they await the BoJ’s policy meeting outcome, especially regarding potential changes in government bond purchases.
Investors will also keep an eye on US economic data releases like the PPI and Weekly Initial Jobless Claims for trading opportunities. Additionally, market sentiment towards safe-haven assets like the Japanese Yen may influence the USD/JPY pair’s direction. The BoJ’s decision is eagerly awaited and could impact the pair’s movement in the near term.