Ella 
The Japanese yen (JPY) maintained its strength against the US dollar during the Asian session on Tuesday and was close to its highest level since early February hit last week. Data released earlier today showed Japan’s producer price index rose more than expected in February, on the back of rising inflation in Tokyo last week and an upward revision to fourth-quarter gross domestic product on Monday. Prior to this, the market expected that another large wage increase in Japan would stimulate consumer spending and demand-driven inflation, which once again confirmed people’s bets that the Bank of Japan is about to change its policy stance and suppressed the yen.
On the contrary, the Federal Reserve (Fed) is widely expected to start cutting interest rates in June, which will not be conducive to the dollar’s recovery from the lowest level since mid-February hit last Friday. This is therefore seen as another factor that could limit the upside of the USD/JPY pair. However, traders seemed reluctant to make aggressive directional bets, preferring to wait for the latest U.S. consumer inflation data due later on Tuesday. Crucial U.S. inflation will provide more clues about the timing and pace of rate cuts by the Federal Reserve, which will boost dollar demand and provide new impetus.
