USD/JPY wobbles around 147.70 ahead of flash US PMI, Fed Powell's speech

• USD/JPY trades sideways around 147.70 ahead of Fed Powell's speech at 16:35 GMT.
• The Fed reduced interest rates last week and signaled more cuts this year.
• Economists expect Tokyo CPI to have grown at a faster pace in September.

The USD/JPY pair trades in a tight range around 147.70 during the European trading session on Tuesday. The pair consolidates as investors await the speech from Federal Reserve (Fed) Chair Jerome Powell at 16:35 GMT.

Investors will pay close attention to Fed Powell's speech to get cues about the current status of the United States (US) labor market and the pace at which the central bank will reduce interest rates.

In the policy meeting last week, the Fed reduced interest rates by 25 basis points (bps) to 4.00%-4.25% amid sowing US job market, even as inflationary pressures remain well above the central bank's 2% target. The Fed signaled through its dot plot that the Federal Fund Rate could decline to 3.6% by the year-end.

On Monday, a slew of Federal Open Market Committee (FOMC) members stated that the rate cut move was precautionary to boost labor demand, but the Fed should remain cautious about reducing interest rates further.

In the North American session, investors will also focus on the preliminary US S&P Global PMI data for September. The Composite PMI is expected to have remained steady at 54.6.

This week, the major trigger for the Japanese Yen (JPY) will be the Tokyo Consumer Price Index (CPI) data for September, which will be released on Friday. Tokyo CPI ex. Fresh Food is estimated to have risen at a faster pace of 2.8% on year, against 2.5% in August. Signs of price pressures accelerating would prompt expectations of more interest rate hikes by the Bank of Japan (BoJ).