According to Odaily, the Japanese yen has reached a 10-week high against the U.S. dollar. ING analyst Chris Turner noted in a report that the yen could strengthen further if upcoming inflation data supports market expectations for additional rate hikes by the Bank of Japan.
Current data suggests a high likelihood of a rate increase by the Bank of Japan in July, with a full 25 basis point hike anticipated by September. Turner expressed surprise at the yen's strong reaction to these relatively modest interest rate changes. While Japanese inflation data may further drive the dollar/yen exchange rate down in the short term, a significant drop in the rate is not expected.