Important events today:

11.09 12:30 UTC: USD – Consumer Price Index.

The yen receives fundamental support from fresh data out of Japan. Wholesale inflation in August rose by seven point six percent year-over-year, exceeding market expectations and strengthening the case for a rate hike by the Bank of Japan at next week’s meeting. A limiting factor for USDJPY gains remains the authorities’ focus on the currency market and their readiness to maintain its orderly functioning.

Nevertheless, in the current session, the American side of the pair remains the stronger factor. The yield on United States ten-year treasury bonds has approached five percent, while the market estimates the probability of a Federal Reserve rate hike next week at approximately seventy percent. At the same time, demand for the dollar is supported by deteriorating risk sentiment amid high oil prices and tensions in the Middle East.

The yen’s rally in early September significantly narrowed the policy divergence between the two central banks, whereas the latest hours have seen a dollar recovery. Expectations of a Bank of Japan rate hike and the risk of official action limit USDJPY potential, making caution necessary. However, ahead of United States inflation data, the combination of high United States yields and current dollar demand maintains an edge for a moderate rise in the pair.

Recommendations: BUY 154.60, SL 154.10, TP 155.65.