USD/JPY recovers few pips from 142.00 mark, looks to US CPI for fresh impetus

• USD/JPY drifts lower for the second straight day and slides back closer to a one-month low.
• The divergent BoJ-Fed policy expectations turn out to be a key factor exerting some pressure.
• Traders seem reluctant to place aggressive bets ahead of the release of the key US CPI report.

The USD/JPY pair remains under some selling pressure for the second successive day on Wednesday, albeit finds some support near the 142.00 mark and recovers a few pips in the last hour. Spot prices currently trade around the 142.30 region, well within the striking distance of a one-month low touched last week. 

This downfall is sponsored by the divergent monetary policies between the Bank of Japan (BoJ) and the Federal Reserve (Fed), which continues to prompt the unwinding of carry trades and driving flows towards the Japanese Yen (JPY). In fact, BoJ Governor Kazuo Ueda reaffirmed the commitment to keep raising interest rates if the Japanese economy meets the central bank's economic forecasts through FY2025. 

In contrast, the markets have fully priced in a 25 basis points (bps) interest rate cut by the Fed at its upcoming policy meeting on September 17-18. This, in turn, fails to assist the US Dollar (USD) to capitalize on its gains registered over the past three days. Apart from this, the cautious market mood is seen benefitting the JPY's relative safe-haven status and exerting some downward pressure on the USD/JPY pair. 

The aforementioned fundamental backdrop favors bearish traders and suggests that the path of least resistance for spot prices is to the downside. Investors, however, might prefer to wait for the release of the crucial US Consumer Price Index (CPI) report for cues about the Fed's rate-cut path. This will play a key role in influencing the near-term USD price dynamics and provide a fresh directional impetus to the USD/JPY pair.