BUZZ-COMMENT-USD/JPY bulls are more optimistic though 155 offers resistance

USD/JPY’s bulls gained an advantage following stronger-than-expected U.S. CPI print of 3%, but they'll still face risks ahead, especially from the BOJ.

By late-U.S. morning, the currency pair was on track for its best day of the year so far, driven by short-covering and early buying from Japanese accounts.

Rising Treasury yields following the U.S. inflation data provided support for USD/JPY, though the upward momentum slowed as it approached the key 155 pivot level. Implied yen volatility eased and turnover was modest after the CPI release, with analysts attributing the stronger-than-expected data to seasonal factors.

Despite this, USD/JPY bulls appeared to be growing more optimistic, anticipating a more hawkish Fed.

A 25 basis point rate cut is currently priced in for later this year. There are also potential positive implications for USD/JPY if the U.S. government pursues reciprocal tariffs with Japan.

However, a stronger USD/JPY is likely to face resistance from a Bank of Japan focused on mitigating the impact of imported inflation due to a weaker yen. As a result, the BoJ is likely to push back against any significant moves above 155, with warnings intensifying should the pair approach 158.

For the time being, USD/JPY faces near-term resistance at its 21-day moving average of 154.54 and 55-day moving average of 154.80. A move above 155.62 daily cloud top and 156 would likely trigger momentum buying.

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