USD/JPY Struggles at 149.00 Ahead of US PPI Data

USD/JPY Struggles at 149.00 Ahead of US PPI Data

The USD/JPY currency pair continues to hover just below the 149.00 mark on Wednesday, as markets absorb recent economic data and prepare for the release of the US Producer Price Index (PPI). Despite touching a three-week high, the US Dollar (USD) appears to be taking a breather following the June Consumer Price Index (CPI) report.

Dollar Pauses After CPI Surge

The US CPI data signaled that import tariffs introduced by President Donald Trump have begun to influence domestic prices. Headline inflation rose to 2.7% year-on-year, prompting traders to scale back expectations of a near-term Federal Reserve rate cut.

This inflation spike has helped the US Dollar Index (DXY) maintain momentum, trading near 98.60, its highest level in three weeks. Still, USD/JPY faces resistance as traders await confirmation of persistent inflation trends from the PPI release at 12:30 GMT.

🇯🇵 Yen Pressured by Trade Tensions

Meanwhile, the Japanese Yen (JPY) remains under pressure due to ongoing US-Japan trade tensions and political uncertainty ahead of Japan's July 20 House of Councillors election. These factors, coupled with reduced Bank of Japan (BoJ) rate hike expectations, are limiting the Yen’s appeal as a safe haven.

Rate Outlook and Market Focus

• Fed's current rate target: 4.25%-4.50%
• September rate cut probability: Fading, due to elevated CPI and potentially strong PPI data
• Key event to watch: US PPI figures — a critical indicator for inflation trends at the producer level

If producer prices reflect similar upward pressure as seen in the CPI, it could strengthen USD demand again and potentially push USD/JPY beyond the 149.00 level.

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