No significant events are expected today.

The USD/JPY pair attracts buyers towards the 145.20 mark on Friday during the early Asian session. The pair remains near three-week highs following the release of Tokyo’s Consumer Price Index (CPI). Attention will shift to the U.S. Personal Consumption Expenditures (PCE) price index for August, which is set to be published later on Friday.

Data released by Japan’s Statistics Bureau on Friday showed that Tokyo’s core consumer price index rose by 2.2% in September compared to a 2.6% increase in August. Meanwhile, the CPI excluding fresh food and energy increased by 1.6% in September, unchanged from the previous month. The Tokyo CPI excluding fresh food rose by 2.0% for the specified month, compared to a 2.4% rise in August and in line with the market consensus forecast of 2.0%.

The Japanese yen (JPY) weakened immediately after the release of the Tokyo CPI inflation data. The slowdown in price growth is unlikely to deter the Bank of Japan (BoJ) from raising interest rates this year, as BoJ Governor Kazuo Ueda has pledged to increase borrowing costs if the economy performs as expected.

However, uncertainty around Japan’s interest rate path may limit the yen’s growth and create tailwinds for USD/JPY in the near term. This week, Ueda stated that the Japanese central bank is not in a hurry to raise rates and may wait for additional data before making any moves. The BOJ is not expected to change rates at its October meeting.

On the other hand, the Federal Reserve last week made a sharp rate cut and signaled another 50 basis point (bps) reduction by the end of the year. On Thursday, Fed Governor Lisa Cook said she supported the 50 bps rate cut last week as a way to address increased “downside risks” to employment. Softer statements from Fed officials are likely to lead to a decline in the dollar against the yen in the near future.

On Friday, market participants will closely watch the release of the U.S. core PCE price index for August, the Federal Reserve’s preferred inflation gauge, for new momentum. An unexpected rise in inflation could dampen hopes for a rate cut at the November meeting and provide some support for the U.S. dollar (USD).

Recommendations: Trading primarily with Sell orders from the current price level.