• The Japanese Yen continues to be underpinned by bets for an early interest rate hike by the BoJ.
• Comments by Japan's Finance Minister suggest that now is not the time for the BoJ to tighten.
• Traders also seem reluctant to place aggressive bets ahead of the US consumer inflation figures.

The Japanese Yen (JPY) remains on the front foot against its American counterpart during the Asian session on Tuesday and flirts with its highest level since early February touched last week. Against the backdrop of a rise in Tokyo CPI last week and an upward revision of the fourth quarter GDP print on Monday, data released earlier today showed that the Producer Price Index (PPI) in Japan grew more than expected in February. This comes on top of hopes that another substantial pay hike in Japan will fuel consumer spending and demand-driven inflation, reaffirming bets for an imminent shift in the Bank of Japan's (BoJ) policy stance and undermining the JPY.

In contrast, the Federal Reserve (Fed) is widely anticipated to begin cutting interest rates in June, which fails to assist the US Dollar (USD) to capitalize on its recovery from the lowest level since mid-February touched last Friday. This, in turn, is seen as another factor that might contribute to capping the upside for the USD/JPY pair. Traders, however, seem reluctant to place aggressive directional bets and prefer to wait for the release of the latest US consumer inflation figures later this Tuesday. The crucial US CPI will be looked upon for more clues about the timing and pace of rate cuts by the Fed, which will drive the USD demand and provide a fresh impetus.