the weekly low. The pair remains depressed through the first half of the European session and is currently placed around the 129.80-129.75 region, down over 0.30% for the day.
A combination of factors provides a modest boost to the Japanese Yen , which, in turn, attracts fresh sellers around the USD/JPY pair. Data released earlier today showed that inflation in Japan's capital, Tokyo rose to a new 41-year high in December. This comes on the back of a similar rise in countrywide inflation and is expected to invite a more hawkish stance from the Bank of Japan later this year. Apart from this, a softer risk tone further underpins demand for the safe-haven JPY.
The US Dollar, on the other hand, struggles to preserve its modest intraday gains and contributes to the offered tone surrounding the USD/JPY pair. In fact, the USD Index, which tracks the greenback against a basket of currencies, languishes near an eight-month low amid the prospects for a less aggressive policy tightening by the. Despite the stronger fourth-quarter growth figures from the US, the markets are still pricing in a smaller 25 bps lift-off at the upcoming FOMC meeting next week.
That said, a goodish pickup in the US Treasury bond yields might act as a tailwind for the greenback and should help limit deeper losses for the USD/JPY pair, at least for the time being. Traders also seem reluctant and move to the sidelines ahead of Friday's release of the Fed's preferred inflation gauge - the Core PCE
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