Forex traders await inflation data out of the US, which is expected to show an annualized increase of 2.5%. The US Fed is closely following developments on the inflationary front but prefers the core PCE Deflator of the GDP report. An increase in inflationary pressures may force the central bank into an unexpected interest rate increase, derailing the fragile economy. How will price action in the USDJPY react following the release of today’s CPI report? Today’s fundamental analysis will take a look at price action in both directions.

Japan has long struggled with the absence of inflation, and today’s minor increase as measured by the Domestic Corporate Goods Price Index doesn’t change it. The Bank of Japan has noted that more aggressive steps may be required to raise inflationary pressures. A revision to coronavirus cases rattled financial markets this morning, boosting safe-haven demand for the Japanese Yen. Can the USDJPY extends its sell-off as the trading day matures? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.