The dollar fell more than 1 percent against the yen as U.S. CPI data showed that inflationary pressures were easing

Daocheng Technology Financial News - Wednesday (May 15) in the United States,USD/JPYThe exchange rate fell as much as 1.1% to 154.736, before narrowing some of its losses. In recent weeks,Yen exchange rateIt fluctuated sharply, falling below 160 for the first time since 1990 at the end of April, and then rebounded sharply after two rounds of suspected intervention by the authorities.

(USD/JPY 60-minute chart)

The wide moat between Japan's ultra-low borrowing rates and higher U.S. borrowing rates has been weighing on the yen. On Wednesday, in April in the United StatesConsumer Price IndexAfter the release of the (CPI) report, the dollar weakened, U.S. Treasury yields plummeted, and the yen rose in tandem.

Traders upped their bets that the Fed would cut rates after the data, with swap pricing now suggesting a more than 80 per cent chance of a 25 basis point cut at the September meeting.

Valentin Marinov, head of G10 FX research and strategy and yen at Cre ́ dit Agricole, said the dollar/yen exchange rate is by far the most sensitive to movements in the U.S. fixed income market, and could see the most volatility if U.S. interest rate investors do cut rates ahead of the Federal Reserve.

The data showed that the so-called core inflation measure - which excludes volatile food and energy costs - rose 0.3 per cent from March, while core price growth slowed to 3.6 per cent year-on-year.

The yen has fallen about 12 per cent over the past year, making it the worst performing G10 currency, and while the Bank of Japan raised its short-term policy rate in March for the first time since 2007, sentiment remains subdued, with bearish bets still dominating the market.

Japan reportedly spent about 9 trillion yen ($57.50 billion) on two suspected yen purchases in late April and early May to stem losses. Masato Kanda, the country's top monetary official, declined to comment on whether authorities had intervened.

Helen Give, a currency trader at Monex, said: "The CPI has certainly been a relief to the BoJ. However, before the Fed started cutting rates, the upper limit of dollar/yen strength was at 150 - the spread is still quite large."

Market watchers believe the yen remains under long-term pressure, with Lawrence Summers, the former US Treasury secretary, saying currency intervention is ineffective in changing the exchange rate, even if Japan is seen to have intervened on a large scale.