USD/JPY extends gains for a third day as US inflation data fuels expectations of prolonged Federal Reserve hawkishness.
The Japanese yen fell to 157.65 against the US dollar on Wednesday, extending its decline for a third consecutive session. The move follows stronger-than-expected US inflation data, which reinforced market expectations that the Federal Reserve will maintain higher interest rates for longer.
Prior to this week, USD/JPY had traded near 155.00, with the yen under pressure from widening yield differentials between US and Japanese government bonds. The latest inflation print has further reduced bets on near-term Fed rate cuts, contrasting with the Bank of Japan’s ultra-loose monetary policy.
The yen’s weakness reflects broader concerns over Japan’s domestic economic outlook, including sluggish wage growth and tepid consumer spending.