The US/JPY pair is constantly trading sideways in a narrow range below the crucial resistance of 140.00 in the European session. The asset is demonstrating topsy-turvy moves as investors have sidelined ahead of the United States inflation release.

S&P500 futures have added significant gains in London as investors are hoping that the Federal Reserve (Fed) would skip raising interest rates this time but will open doors for further rate hikes in July. Market sentiment is highly positive and has trimmed appeal for the US Dollar.

The US Dollar Index (DXY) has printed a fresh two-week low at 103.21 as the odds for a neutral interest rate policy by the Fed are extremely solid. More downside in the USD Index looks solid, facing pressure from the risk-appetite theme and the hopes of further softening of US inflation.

Analysts at Wells Fargo expect the overall consumer price inflation is likely to moderate in May. We forecast the headline CPI was flat during the month, as gasoline prices fell and food prices appeared to hold steady. Core inflation, on the other hand, likely remained firm. Auction data suggest used vehicle prices rose again last month, and we look for ongoing strength in core services. Specifically, we suspect the core CPI rose 0.4% for the third consecutive month, which would leave the YoY change little improved at 5.3% in May.

On the Japanese Yen front, the interest rate decision by the Bank of Japan (BoJ) will be keenly watched. BoJ Governor Kazuo Ueda is expected to keep the interest rate policy unaltered as he has been reiterating the need for further monetary stimulus to keep inflation steadily above 2%. The central bank is working on raising wages and the overall demand.