Important events today:

13:30 UTC – USD: Producer Price Index

15:00 UTC – USD: FOMC member Neel Kashkari will deliver a speech

The Japanese yen (JPY) strengthened for a second consecutive day against its US counterpart on Friday and recovered from a one-month low on the back of stronger US consumer inflation data.

The U.S. Consumer Price Index as well as comments from Federal Reserve (Fed) officials made investors reconsider the likelihood of a rate cut in March. In contrast, the Bank of Japan (BoJ) is expected to postpone its plan for a rate hike due to the recent devastating earthquake in central Japan, lower inflation in Tokyo and weak wage data. This could undermine the JPY and help limit a significant decline in the USDJPY pair.

Growing market confidence that the Fed will start easing its monetary policy sooner rather than later is causing a new round of declines in US Treasury yields, which is keeping USD bulls from aggressive bets. Geopolitical risks related to the war between Israel and Hamas, as well as China’s economic problems provide some support to the safe-haven Japanese Yen and become the key factors putting pressure on the USDJPY pair.

Recommendations: Sell when prices reach 144.90 and Buy when prices are above 145.20