The Yen continued its gradual decline against the Dollar on Monday after last week's turbulent trading, as investors assessed the probability of a significant Fed rate cut next month ahead of a series of US economic reports.

This comes after a volatile week marked by a sharp sell-off in currencies and stock markets, led by concerns about the US economy and the Bank of Japan's hawkishness.

Last week ended on a calmer note, as stronger-than-expected US jobs data on Thursday prompted markets to reduce expectations for Federal Reserve interest rate cuts this year, Reuters news agency reports.

“If global investor risk sentiment continues to improve in the week ahead, it is likely that market expectations for Fed rate cuts will continue to be scaled back,” according to MUFG currency analysts.

That said, investors are still anticipating 100 basis points of Fed cuts by the end of the year, according to the CME Group's FedWatch tool. 

Upcoming US producer and consumer price data, due out on Tuesday and Wednesday, could potentially alter market expectations.

“It's more a case of market squaring up a little bit ahead of the US inflation data,” stated currency strategist at OCBC Bank in Singapore, Christopher Wong.

At the time of writing, the greenback was trading up 0.5% at 147.315, whilst the Euro stood at $1.091850 and the Dollar index, measuring the currency against six peers, was flat at 103.21.

Sterling was down 0.1% at $1.2764.

Last week, the single currency hit a high of $1.1009, not seen since 2nd January.

The Japanese Yen reached its strongest since the beginning of the year last Monday of 141.675 per Dollar, yet still remains down some 4% against USD so far this year.

Furthermore, JP Morgan analysts updated their Yen forecast to 144 per Dollar by the second quarter of 2025, indicating that the Yen is expected to stabilise over the next few months.

“Carry trades have erased year-to-date gains; we estimate 65-75% of positioning being unwound,” they said in a note over the weekend.