Yen's Recovery Prospects Limited Amid Strong US Dollar and Hawkish Fed

The yen is attempting to recoup some of its recent losses after Tokyo inflation data showed core inflation accelerating to 2.7% in September, exceeding the Bank of Japan's target for the first time in nine months.

However, the central bank's summary of opinions from its September meeting was less hawkish than expected and offered no clear guidance on when the next rate hike will occur.

The yen remains on track for a third consecutive weekly decline due to a strong US dollar and elevated US Treasury yields, which are weighing on the Japanese currency amid expectations that the Federal Reserve will continue raising rates as high energy prices add to inflationary pressures.

From a technical perspective, the USD/JPY pair could see another corrective rise towards the 158.75-158.99 resistance area, but the main scenario envisages a subsequent reversal lower towards 157.34, with the decline potentially extending towards 155.60 and the 153.50 area remaining a further downside target.