USD/JPY falls sharply from 151.00 as US Dollar retraces

• USD/JPY slumps from 151.00 amid correction in the US Dollar.
• Easing Japan’s inflation would dwindle BoJ’s plans of quitting the dovish policy stance.
• Fed Waller prefers to delay rate cuts.

The USD/JPY faces an intense sell-off from 150.80 in Friday’s early New York session. The asset has come under pressure as the US Dollar retraces vertically, even though Federal Reserve (Fed) policymakers argue in favor of keeping interest rates at their current level.

Considering positive overnight futures, the S&P500 is expected to open on a bullish note amid improved market sentiment. The US Dollar Index (DXY) corrects to 103.80 as the appeal for safe-haven assets wanes. 10-year US Treasury yields have dropped to 4.30%.

Fed policymakers are not interested in unwinding their restrictive interest rates stance as they are less convinced that inflation will sustainably return to the 2% target.

On Thursday, Fed Governor Christopher Waller added he wants to see inflation data for at least a couple of months to judge whether stubborn figures in January were mere short-term fluctuations or progress in inflation easing towards 2% has stalled. Waller added that risks associated with delaying rate cuts are lower than acting on them too quicky.

On the Japanese Yen front, investors await the National Consumer Price Index (CPI) data for January, which will be published on Tuesday. The annual CPI excluding fresh food is expected to come out below 2.0% at 1.8% against the former reading of 2.3%. This would dampen the Bank of Japan’s (BoJ) plans to exit the decade-long expansionary policy stance.