The USD/JPY pair slipped on Friday, approaching the key 150.00 level after Japan’s latest inflation data showed a slowdown in consumer prices. The release of weaker-than-expected CPI figures has tempered expectations for any immediate policy changes from the Bank of Japan (BOJ), prompting the yen to gain some ground against the U.S. dollar.
Japan's consumer price index (CPI) rose by 3.0% year-on-year in September, down from 3.2% in August, suggesting that inflationary pressures may be easing. This data supports the BOJ's cautious stance on tightening its ultra-loose monetary policy, a move many market participants had been speculating on in recent weeks.
Despite the yen’s slight recovery, analysts remain skeptical about its long-term strength, particularly as the U.S. dollar continues to benefit from hawkish Federal Reserve policy. With the U.S. economy showing resilience, expectations for higher interest rates have kept the dollar strong, making it challenging for the yen to hold onto gains.
“The yen’s movement is largely dictated by the BOJ's dovish policy,” said Richard Tanaka, chief economist at XYZ Financial. “Until we see a stronger commitment to tackle inflation with tighter measures, the yen will likely remain under pressure, especially with the Fed maintaining its rate hike trajectory.”
Investors are now watching closely for any signals from the Bank of Japan’s upcoming meeting, where policymakers will review their stance on inflation and interest rates. Until then, the USD/JPY pair is likely to remain volatile, hovering around the psychological 150.00 level.
