Anna 
The Japanese yen continued its subdued performance against the US dollar as European markets prepared to open on Thursday, extending its distance from the one-week high reached the previous day. A boost in investor optimism followed additional monetary stimulus measures announced by the People’s Bank of China (PBoC) on Wednesday, contributing to positive sentiment in global stock markets. The yen’s safe-haven status has weakened amidst the recent widening of the U.S.-Japan interest rate differential, providing support for USD/JPY.
On another front, the Bank of Japan (BoJ) indicated on Wednesday that conditions were conducive to a gradual exit from its stimulus program and negative interest rates. Despite this, ongoing geopolitical tensions and uncertainties in the global economic outlook are expected to act as limiting factors for further yen losses. The US dollar, however, faces challenges in attracting significant buying as investors await clearer signals on when the Federal Reserve (Fed) will commence interest rate cuts, potentially hindering substantial USD/JPY appreciation.
Traders are likely to exercise caution and avoid aggressive directional bets, especially with crucial inflation data from Japan and the United States scheduled for release on Friday. The Statistics Bureau of Japan will unveil the Tokyo core CPI report during the Asian session, while the focus remains on the US personal consumption expenditures (PCE) price index. In addition, Thursday’s US economic reports, including an advance report on fourth-quarter gross domestic product (GDP), durable goods orders, and weekly jobless claims data, are expected to provide support for USD/JPY, making it an area for potential short-term trading opportunities.
