USD/JPY remains below 149.50, retraces the recent losses

• USD/JPY receives upward support after the soft Japan's CPI.
• Japanese inflation reduced to 2.8% from 2.9% prior.
• Improved US Treasury yields could limit the losses of the US Dollar.
• US Core PCE is due on Friday, expected to reduce from 4.2% to 3.9%.

USD/JPY recovers from the recent losses, trading higher around 149.40 during the Asian session on Friday. The pair receives upward support after the downbeat Japanese data released on Friday.

Statistics Bureau of Japan published the headline Tokyo Consumer Price Index (CPI) on a yearly basis rose 2.8% in September slightly lower than the previous 2.9% readings. Core CPI (YoY) increased 3.8%, which was 4.0% in August.

Japan’s inflation continues to surpass the Bank of Japan's (BoJ) 2% target, but the central bank is expected to maintain its ultra-loose monetary policy until it is confident that inflation will consistently remain above its minimum target.

The US Dollar Index (DXY) extends losses on the second day after the moderate datasets from the United States (US), trading lower around 106.00 by the press time.

US GDP kept consistent at 2.1% as expected. Initial Jobless Claims for the week ending on September 22, improved to 204K from the 202K prior, falling short of the 215K expected.

US Pending Home Sales showed a decline of 7.1%, exceeding the market expectation of a 0.8% fall, swinging from the 0.9% rise previously.

However, the yield on the 10-year US Treasury bond retraces the recent losses, standing at 4.60% at the time of writing. The improved US yields could put a cap on the losses of the US Dollar (USD).

The US Dollar (USD) saw a strong rally over the past week, buoyed by robust economic indicators, and it climbed to its highest levels since December. Furthermore, the USD's resilience can be linked to the favorable performance of US Treasury yields.

Chicago Fed President Austan Goolsbee also highlighted the rare opportunity to achieve this without a recession, indicating the US Federal Reserve’s (Fed) commitment to managing inflation while sustaining economic growth.

Fed President Thomas Barkin acknowledged that recent inflation data has been positive but emphasized that it's premature to determine the future course of monetary policy.

Traders await the US Core Personal Consumption Expenditure (PCE) Price Index, the Fed's preferred measure of consumer inflation, which is due on Friday. The annual rate is expected to reduce from 4.2% to 3.9%.