USD/JPY establishes below 144.00 amid lower consensus for US Inflation data

• USD/JPY has established a balanced profile below 144.00 as the US Inflation is expected to shift lower.
• Higher interest rates and falling gasoline prices are responsible for a decline in consensus for headline CPI.
• Japan’s officials stated that the recent fall in yen cannot be justified based on fundamentals.

The USD/JPY pair is auctioning below the critical cushion of 144.00 in the Asian session. Broadly, the asset is displaying topsy-turvy moves in a tad wider range of 143.31-145.00 from Wednesday. The pair is witnessing a volatility contraction phase after refreshing a 24-year high. More consolidation is expected from the counter as investors are awaiting the US Consumer Price Index (CPI) data, which will release on Tuesday.

As interest rates are consecutively escalating by the Federal Reserve (Fed) and gasoline prices have trimmed significantly, the headline CPI figure is expected to remain lower. For July, the annual inflation landed at 8.5%. Well, price pressures have already displayed exhaustion signals but for a decline in the pace of hiking interest rates, the inflation rate needs to slow down for months to build confidence in the sub-conscious mind of Fed policymakers.

Meanwhile, the US dollar index (DXY) has given a downside break of the consolidation formed in a narrow range of 109.60-109.71 in the late New York session. The DXY is declining as the market participants already discounted the hawkish speech from Fed chair Jerome Powell.

On the Tokyo front, investors are awaiting more build-up on news of Japan’s intervening in the Fx market to support yen. Japan's top currency diplomat Kanda said on Thursday that recent yen falls cannot be justified based on fundamentals, as reported by Reuters.

He further added that the Bank of Japan (BOJ) is expected to take necessary action to support the yen bulls. Also, Tokyo is communicating with other countries on recent Fx moves. The meeting was attended by officials from Japan’s Ministry of Finance, the Financial Institutions Agency, and the Bank of Japan (BOJ).