The Japanese Yen (JPY) staged a recovery against the US Dollar on Friday, pushing USD/JPY down to 152.85 from a high of 153.78. The pair is poised for a significant weekly decline of nearly 2.7%, driven by softer US inflation data which trimmed the Greenback’s earlier gains.
January’s US CPI data revealed a cooling trend, with headline inflation rising just 0.2% MoM and 2.4% YoY—both missing market expectations. While Core CPI met forecasts at 0.3% MoM and 2.5% YoY, the overall softness has reinforced market expectations for Federal Reserve easing. Traders are now pricing in approximately 61 basis points of rate cuts for 2026.
Simultaneously, the Yen found support from domestic political stability following Prime Minister Sanae Takaichi’s landslide election victory. Investors have welcomed her pro-growth fiscal stance, while Finance Minister Satsuki Katayama noted that markets have stabilized following initial concerns over consumption tax cuts. On the monetary front, BoJ board member Naoki Tamura signaled that while the central bank intends to hike rates as the economy improves, they remain cautious about tightening policy prematurely.
