• The Japanese Yen appreciates as traders expect the BoJ to keep interest rates unchanged on Friday.
• Japan's Consumer Price Index rose to 3.0% YoY in August, reaching its highest level since October 2023.
• The US Dollar faces challenges due to rising odds for additional Fed rate cuts in 2024.

The Japanese Yen (JPY) edges lower against the US Dollar (USD) following the National Consumer Price Index (CPI) data released on Friday. Traders are now focusing on the Bank of Japan (BoJ) policy decision later in the day, with expectations of keeping its short-term interest rate target between 0.15% and 0.25%.

Japan's Consumer Price Index (CPI) increased to 3.0% year-on-year in August, up from 2.8% previously, marking the highest level since October 2023. Additionally, the Core National CPI, excluding fresh food, reached a six-month high of 2.8%, rising for the fourth consecutive month and in line with market expectations.

The downside of the USD/JPY pair is supported by a weaker US Dollar (USD) as expectations grow for additional rate cuts by the US Federal Reserve (Fed) by the end of 2024. The latest dot plot projections indicate a gradual easing cycle, with the 2024 median rate revised to 4.375%, down from the 5.125% forecast in June.

However, Federal Reserve Chair Jerome Powell stated in the post-meeting press conference that the Fed is not in a hurry to ease policy and emphasized that half-percentage point rate cuts are not the "new pace."