After rising last week and earlier in the week on North Korea-related tensions, the yen has been weakening thanks to conciliatory remarks by Donald Trump. Trump recently thanked China for its efforts to reign in North Korea - China has instructed its banks to cease doing all business with North Korean individuals and businesses. Previously, Trump suggested that war was a real possibility with North Korea, resulting in stronger safe haven demand for the yen.
USD/JPY has managed to rise above 112 as a result, and is today trading closer to 112.90. USD/JPY is also gaining based on Yellen's comments calling for higher interest rates. Specifically, the Federal Reserve Chair has suggested that rates can go higher despite inflation remaining below the Fed's 2% target. EUR/JPY has been trading sideways, as the euro continues to weaken following last weekend's elections in Germany. The pair is currently trading close to 132.60.
This week, markets will be closely watching inflation data that is set to be released on Friday. Japan has been mired in low inflation for several decades, and most observers expect the current trends to continue. If the status quo is maintained, inflation data should have a minimal impact on the yen.