USD/JPY sees minimal gains on geopolitical tensions as Japan’s inflation decelerates

• USD/JPY prints minimal gains of 0.05% despite a drop in US 10-year Treasury bond yields.
• Geopolitical tensions in the Middle East and a light US economic calendar leave traders adrift.
• Japan's core Consumer Price Index dips to 2.8% YoY, with fears of further inflation amidst rising oil prices.

The USD/JPY hovers at around 149.85 and prints minimal gains of 0.05% due to a risk-off impulse, even though the US 10-year Treasury bond yield falls, as traders expect no further hikes by the US Federal Reserve (Fed).

USD/JPY remains subdued as traders weighed geopolitical events and economic reports

A light economic calendar in the United States (US) left traders adrift to geopolitical events and the latest inflation report in Japan. A possible escalation of the Middle East conflict threatens to spread to more regional countries. Leaders from the region would meet in Cairo for a summit.

Aside from this, the Japanese economic docket featured the core Consumer Price Index (CPI) dipped to 2.8% YoY, below August’s 3.1%, though higher than expected. Although it continued to decelerate, fears that inflation could increase further as Oil prices are underpinned by the escalation of the Israel-Hamas conflict.

The Bank of Japan’s (BoJ) ultraloose monetary policy stance remains dovish, suggesting the USD/JPY pair could rally past the 150.00 mark. However, Japanese authorities’ threats of intervening in the markets capped the advance as market participants eye the BoJ's next meeting on October 31.

Meanwhile, Fed officials stated that inflation has come down, but it remains high, adding the US central bank would be data dependent to decide its next policy decision.

USD/JPY Technical Levels