USD/JPY is searching for direction ahead of US and Japanese inflation data releases and remarks by officials later this week. Australia's July CPI is also due, with the underlying inflation trend and the outlook for the next meeting in focus.
USD/JPY at one point fell to around ¥159, but continued to search for a floor around the intraday low of ¥159.05. EUR/USD also came under buying pressure at times against a backdrop of lower oil prices and declining US long-term yields, but failed to break above the previous day's high.
This week, Japanese and US inflation data and remarks by officials are unlikely to provide a decisive market catalyst, and the market is expected to remain resilient while continuing to search for direction. Although a BOJ rate hike is being priced in, some market participants believe concerns over expansionary fiscal policy could continue to support selling pressure on the yen.
Australia is due to release its July CPI, which the market expects to show year-on-year growth of around 3.3%. As a timely indicator, it is attracting considerable market attention and is expected to provide clues about its potential impact on the RBA's next meeting.