Important events today:

28.08 14:00 UTC: USD – Fed Chair Kevin Warsh Speaks.

The yen receives fundamental support following fresh data from Tokyo: core inflation in August accelerated to one point eight percent, while the measure excluding food and fuel reached two point zero percent. This bolsters expectations of a Bank of Japan rate hike as early as September. Upside potential for USDJPY also remains constrained by the recent experience of currency interventions, which leaves the market more cautious regarding further yen weakness.

At the same time, the dollar maintains a stronger momentum during the current session. The US currency holds near a one-week high, while Fed officials continue to point to persistent inflation risks. The market has raised the probability of further US policy tightening by the end of the year, so the interest rate expectation differential still supports the dollar. Meanwhile, the yen has already given back part of its previous gains following intervention measures.

The main risk for buy positions remains fresh signals from Japanese authorities and an accelerated repricing of the Bank of Japan’s September decision. However, while fresh statistics have not led to sustained yen strengthening, the dollar factor remains dominant. If the Fed Chair’s speech confirms a hawkish stance on inflation, the base-case scenario allows for a moderate continuation of the upside in USDJPY.

Recommendations: BUY 159.45, SL 159.15, TP 160.20.