Dollar Steadies as Yen Weakens Ahead of US PCE Inflation Data

The Japanese yen continued to weaken against the US dollar on Tuesday as the greenback stabilized after recent losses. The US dollar index held steady, providing support for the USD/JPY pair to edge higher. As of the Asian session, the pair traded around 149.80, up 0.2% on the day.

The stabilization of the dollar came as Treasury yields recovered slightly, with the 10-year note yielding around 4.3%. Investors have been recalibrating expectations for Fed rate cuts after a string of mixed economic data, leaving the greenback without a clear directional bias.

The upcoming US Personal Consumption Expenditures (PCE) price index is expected to show a 0.3% month-over-month increase for January, according to consensus estimates. A hotter-than-expected reading could reinforce the Fed's cautious stance, potentially delaying rate cuts and supporting the dollar.