Investors boost odds of a Fed rate hold in July to 85.6% after June CPI data showed cooling inflation.
The USD/JPY pair retreated to 162.36 in European trading Monday as the US Dollar weakened on growing expectations the Federal Reserve will keep rates unchanged next week. The US Dollar Index fell to 100.70, reflecting reduced hawkish bets following softer June CPI data.
Prior to the inflation report, Fed rate cut probabilities stood at 65.8% for July. The shift follows declines in both headline and core inflation, easing pressure on the Fed to tighten further. Meanwhile, the Japanese Yen remains under pressure amid heightened geopolitical risks after US strikes in the Middle East.
Technically, USD/JPY holds near a multi-decade high of 162.84, consolidating above its 20-period EMA at 162.31.