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USD/JPY holds near four-decade highs as traders await US CPI
The yen is still pressured by Middle East tensions and a crude oil bounce, while investors wait on US inflation data and Fed Chair Kevin Warsh’s testimony.
The dollar yen pair is consolidating after a strong prior session move, trading just below the mid-162 range during the Asian morning, according to FXStreet. Spot prices remain near a four-decade high touched earlier this month, which has kept traders cautious around potential Japanese intervention.
FXStreet said the US dollar’s latest pause after a two-day rally reflects a wait for upcoming US consumer inflation figures and US Federal Reserve Chair Kevin Warsh’s congressional testimony. At the same time, expectations for hawkish Fed policy and renewed US Iran tensions are supporting the safe-haven greenback.
On the yen side, the report pointed to a potential risk of yen weakness tied to Japan’s heavy reliance on imported oil from the Middle East. It also cited Japan Finance Minister Satsuki Katayama saying changes to the Government Pension Investment Fund, or GPIF, asset allocation could be examined if the investment environment shifts sharply, a stance that FXStreet said lends support to the yen.
FXStreet added that a rise in crude prices has reignited inflation concerns and lifted bets of US borrowing cost increases by the end of the year. With the Bank of Japan having lifted its policy rate to 1% recently, the US-Japan rate gap outlook is expected to keep the yen carry trade active even as USD/JPY remains near multi-decade levels.
Latest closeWTI crude $78.04 ▲9.3%|USD/JPY 162.44 ▲0.1%