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• USD/JPY regains positive traction on Tuesday, albeit the uptick lacks bullish conviction. 
• A positive risk tone undermines the safe-haven JPY and lends some support to the pair.
• Bets for bigger Fed rate cuts weigh on the USD and should cap gains ahead of the US CPI.

The USD/JPY pair attracts some dip-buying during the Asia session on Wednesday and climbs back above the 147.00 mark in the last hour, reversing the previous day's modest downfall. Spot prices, however, remain confined in a familiar range held over the past week or so as traders keenly await the US consumer inflation figures before positioning for the next leg of a directional move. 

The closely-watched US Consumer Price Index (CPI) report is due for release later today and will be looked upon for cues about the Federal Reserve's (Fed) rate-cut path. This, in turn, will play a key role in influencing the USD demand in the near term and provide some meaningful impetus to the USD/JPY pair. Heading into the key data risk, the upbeat market mood is seen undermining the safe-haven Japanese Yen (JPY) and acting as a tailwind for the USD/JPY pair. 

Meanwhile, data released on Tuesday showed that the US Producer Price Index (PPI) rose less than expected in July, supporting prospects for deeper interest rate cuts by the Federal Reserve (Fed) in September. This, in turn, dragged the US Treasury bond yields lower across the board and the US Dollar (USD) to over a one-week low. Apart from this, expectations that the Bank of Japan (BoJ) will hike rates again in 2024 help limit the JPY losses and might cap the USD/JPY pair. 

Even from a technical perspective, the recent range-bound price action points to indecision among traders. This further makes it prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out near the 141.70-141.65 region, or the lowest level since early January touched last week.

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