USD/JPY Is Unable To Establish a Clear Trajectory, Remaining In a Range Near The 149.00s

On Monday during the Asian session, the USD/JPY pair experiences dip-buying near the region of 149.35-149.30. However, this buying is short-lived and the pair continues to trade below a one-and-a-half-week high that was reached on Friday.

The US Dollar (USD) begins the week on a sluggish note, unable to capitalise on gains registered in the two days following the US CPI. This is perceived to be operating as a headwind for the USD/JPY pair. A number of Federal Reserve (Fed) officials have indicated that the US central bank may not proceed with a rate hike in November, given the tightening financial conditions caused by an increase in bond yields. As a result, USD bulls are unable to place aggressive wagers, and the USD/JPY pair is experiencing a headwind.

Moreover, conjectures regarding potential Japanese intervention in the foreign exchange market to halt a persistent devaluation of the Japanese Yen (JPY) serve to further impede progress on the principal. However, a more dovish posture adopted by the Bank of Japan (BoJ) and a bullish sentiment surrounding US equity futures are perceived to be undermining the safe-haven JPY and providing the USD/JPY pair with some support.  Indeed, the Japanese central bank maintains its perspective that inflation is temporary and does not intend to reduce its substantial monetary stimulus.

In contrast, the likelihood of an additional Fed rate increase by the end of the year is still factored into market prices. As a result of last week's release of the US CPI report, which indicated that inflation remains significantly above the Fed's 2% objective and bolstered prospects for further policy tightening, the bets were lifted. This continues to bolster elevated US Treasury bond yields and benefits USD supporters, indicating that the USD/JPY pair is likely to encounter minimal resistance on the upside. Consequently, even a slight decline could be perceived as a buyer's opportunity.

Presently, market participants are focusing on the economic agenda of the United States, which includes the Empire State Manufacturing Index. In conjunction with the Fed's benchmarks and US bond yields, this will impact the USD price dynamics and give the USD/JPY pair some momentum in the early North American trading session. In addition, traders will utilise the general risk sentiment as a guide to identify short-term opportunities surrounding the main.