The USD/JPY pair discovers buying interest after posting a fresh four-week low of 156.00 in Friday’s European session. The asset rebounds as the US Dollar (USD) gains ground, with investors turning cautious ahead of United States (US) President-elect Donald Trump’s inauguration on Monday.

Investors expect that Trump will announce tariff and taxation policies right after returning to the White House. Market experts believe that these policies will be pro-growth and inflationary for the US economy, a scenario that will allow the Federal Reserve (Fed) to keep interest rates at their current levels.

At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, wobbles above the key support of 109.00.

This week, the US Dollar remains broadly under pressure as traders raised Federal Reserve (Fed) dovish bets after the release of the US Consumer Price Index (CPI) data for December, which showed that the annual core inflation surprisingly decelerated to 3.2% from the former reading of 3.3%, which is the lowest reading in over three years.

On the Tokyo front, the Japanese Yen (JPY) performs weakly on Friday after a strong two-day upside move even though Nikkei has reported that a majority of Bank of Japan (BoJ) officials are expected to raise interest rates at the policy meeting on January 23-24. This week, BoJ Governor Kazuo Ueda confirmed that the central bank will discuss raising interest rates in the policy meeting next week. Ueda said that the central bank is currently “analyzing data thoroughly” and will compile the findings in the quarterly outlook report, and based on that, the bank will discuss whether to “raise interest rates at next week's policy meeting.”

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