USD/JPY fell for a third consecutive session on New Year’s Eve, trading around 156.20 during early European trading on Tuesday. However, the Japanese yen (JPY) is expected to fall by more than 10% in 2024, marking its fourth consecutive year of weakness against the U.S. dollar (USD).
USD/JPY’s decline was attributed to strength in the Japanese yen (JPY) as traders continue to assess market sentiment on the possibility that the Bank of Japan (BoJ) may close the gap in January following the release of Tokyo Consumer Price Index (CPI) inflation data last week. rate hike.
In December, Tokyo’s annual CPI inflation rate rose to 3.0%, higher than November’s 2.6%. At the same time, Tokyo’s CPI, which excludes fresh food and energy, rose to an annual rate of 2.4%, compared with 2.2% last month. Excluding fresh food, Tokyo’s CPI annual rate also rose to 2.4%, slightly lower than the 2.5% expected, but higher than November’s 2.2%.
Additionally, the USD/JPY pair faces challenges as the U.S. dollar falls amid weaker Treasury yields. The U.S. Dollar Index (DXY), which tracks the greenback against six major currencies, remains weak around 108.00 as U.S. Treasury yields fell about 2% on Monday. The 2-year and 10-year Treasury yields are 4.24% and 4.53%, respectively.
Downside risks for the U.S. dollar appear to be limited as the Federal Reserve (Fed) is likely to take a more cautious approach to potential rate cuts in 2025, signaling a shift in its approach to monetary policy. The adjustment comes amid uncertainty over the Trump administration’s upcoming economic strategy.
