Key Events Today:

02.10 12:30 UTC: USD – Unemployment Rate.

Tokyo inflation gave the Yen fresh support: the core CPI (excluding fresh food) accelerated in September to 2.7% from 1.8%, beating expectations of 2.4%. Price growth excluding fresh food and energy reached 3%, while services inflation also picked up. This broadens the grounds for further rate hikes by the Bank of Japan, although part of the acceleration is tied to the expiration of subsidies.

High US bond yields continue to support the US Dollar, but this rise cannot be attributed solely to expectations of an imminent Fed rate hike. Softer US inflation and cautious policy signals have reduced the probability of an immediate move. Amid European fiscal risks, safe-haven demand is capable of supporting both the Dollar and the Yen, making their cross-rate require separate evaluation.

For USD/JPY, the fresh Japanese inflation signal currently creates a foundation for a downside move, despite the persistent interest rate differential. The US employment report could reverse this scenario if strong wage growth reignites Fed tightening expectations. Prior to the release, the baseline idea is selling the pair: support for the Yen is grounded in fresh data rather than solely on intervention risks.

Recommendations: SELL 157.95, SL 158.30, TP 157.15.