The yen pair is trading on sideline today ahead of Federal speech about inflation and due to rise in Japan CPI This has put the yen pair into seesaw moment. Japan’s core consumer prices rose for the first time in September after the initial stages of the corona virus outbreak in March 2020, a sign that rising energy and raw material costs are gradually raising inflation. Analysts expect a rise in fuel prices in the coming months to accelerate consumer inflation, although any improvement will be moderate compared to other advanced economies because sluggish wage growth weighs on consumption and prevents companies from inflating prices.

The core consumer price index (CPI), excluding volatile fresh food prices, which included fuel costs, rose 0.1% in September from a year earlier, in line with an average market forecast. In August it remained unchanged. This gain was largely driven by a 7.4% increase in energy costs, the largest annual increase in nearly three years. Analysts expect key consumer inflation to move towards 1% in the coming months as the recent rise in crude oil prices raises bills fo

three to five months. But many of them suspect that such price hikes will lead to broader, more sustainable price growth.

These data will be among the factors that the Bank of Japan will consider at next week’s policy meeting when releasing new quarterly growth and inflation forecasts. Japan has not recovered from global commodity inflation, with wholesale prices hitting a 13-year high of 6.3% in September, putting pressure on corporate profit margins and raising the risk of unwanted consumer price rises. But consumer inflation is hovering around zero as companies are reluctant to cover spending on housing, reinforcing expectations that the BOJ’s 2% target will be elusive.

The dollar, on the other hand, remained firm in the early hours of Friday, rising by encouraging economic data as commodity currencies plummeted and headed for its second week of decline as traders ruled their positions after this week’s brisk rally. Better jobs and household data and rising U.S. Treasury yields helped the dollar rise at the end of the U.S. session on Thursday, which took place in Asian Hours.

John Williams, chairman of the New York Federal Reserve said long-term inflation expectations are in line with the central bank’s 2% target. “If inflation expectations are anchored at a very low level, it will reduce real inflation over time. Today there is great uncertainty about the economy,” he said in a statement. Home prices have risen sharply due to the low cost environment and pandemic factors. However, the dollar index is down 0.18% for the week and is about to release its second weekly decline.

USD/JPY 4 Hour Chart:

Support: 113.62 (S1), 113.25 (S2), 112.85 (S3).

Resistance: 114.38 (R1), 114.78 (R2), 115.14 (R3).

Amidst this above catalysts, the yen pair trading sideways. We expect a mid-trend for USD/JPY.