USD/JPY Consolidates Near 159.00 as Inflation Data and US Buyback Plan Weigh on Dollar

The USD/JPY pair has been consolidating near the 159.00 level during the European session on August 21, as both the yen and the dollar showed relative weakness among major currencies.

The Bank of Japan's core CPI for July rose 1.8% year-on-year, in line with expectations and accelerating from June's 1.6%. This reinforces market expectations for a rate hike by the Bank of Japan.

The US Treasury Department's expansion of its debt buyback program to curb rising borrowing costs has continued to weigh on the dollar, providing additional support to the yen.

Rabobank maintains its three-month target forecast at 158.00 but warns that a further short-term rally toward 160.00 cannot be ruled out.