USD/JPY: Dollar Overtakes ¥155 as Yen Deepens Retreat Ahead of US Inflation Data

Languishing Japanese yen is getting demolished out there — the US dollar is up more than 10% in the span of two months.

• The USDJPY pair climbed further to the upside as the Japanese yen was acting practically as a horse-shaped pinata that traders slapped with shorts for pips. The yen has lost more than 10% to the stronger US dollar in the span of two months and has been unable to provide any meaningful resistance to the short sellers. Early Wednesday morning, the US dollar eclipsed ¥155.00, marking a 3.5-month high and trading well-beyond the 200-day moving average.
• Domestically, the yen isn’t in a good place. It’s been swayed by political tremors with Prime Minister Shigeru Ishiba’s party losing its majority. The nation’s central bank isn’t helping either. The Bank of Japan is reluctant to increase interest rates, saying that the economy should be allowed to run more easily under ultra-loose borrowing conditions. That is, despite running the risk of flaring up inflation pressures.
• Speaking of inflation pressures, the US is just about to release its consumer price index report (CPI). For October, analysts have projected a slight bump in price growth to 2.6% from 2.4% in September. Price pressures were largely in the rearview for the Federal Reserve, which is moving confidently to slash interest rates. But if they rear up again, this could lead to renewed upside momentum for the US dollar across the forex board.