FX.co ★ Yen Rises As Traders Remain Cautious

The Japanese yen strengthened against other major currencies in the Asian session on Tuesday, as traders seem cautious and reluctant to make significant moves ahead of the release of data on U.S. consumer and producer price inflation later in the week, which may have a considerable impact on the outlook for interest rates.

Ahead of the inflation data, CME Group's FedWatch Tool is indicating a 94.9 percent chance of another quarter point rate hike at the next Fed meeting later this month.

In the Asian trading today, the yen rose to near 3-week highs of 154.93 against the euro; 181.00 against the pound; and 159.02 against the Swiss franc, from yesterday's closing quotes of 155.45, 181.71 and 159.59, respectively. If the yen extends its uptrend, it may find resistance around 150.00 against the euro, 175.00 against the pound and 154.00 against the franc.

From yesterday's closing value of 87.75 against the NZ dollar, the yen climbed to nearly a 3-week high of 87.48. On the upside, 84.00 is seen as the next resistance level for the yen.

Against the U.S., the Australia and the Canadian dollars, the yen advanced to near 4-week highs of 140.61, 94.02 and 106.05 from Monday's closing quotes of 141.31, 94.32 and 106.40, respectively.

The yen may test resistance around 138.00 against the greenback; 90.00 against the aussie and 102.00 against the loonie.

Looking ahead, German ZEW economic sentiment index for July is due to be released in the European session.

In the New York session, U.S. MBA weekly mortgage approvals data is slated for release.