USD/JPY pressured as Japan core CPI accelerates to 2-year high

USD/JPY faces selling pressure after Japan's core CPI data revealed the fastest inflation growth in two years, strengthening the case for Bank of Japan policy normalization. The accelerating inflation suggests the BOJ may need to adjust its ultra-loose monetary policy stance sooner than anticipated, providing fundamental support for the yen. Asian FX markets reacted positively to the data, with yen crosses showing broad weakness as traders position for potential BOJ action. The inflation acceleration marks a significant shift in Japan's economic dynamics, moving closer to the BOJ's sustainable 2% target. Technical analysis shows USD/JPY testing support at key levels, with momentum indicators suggesting further downside potential. Market participants are closely watching for any BOJ policy signals, as sustained inflation above target could trigger the unwinding of years of monetary stimulus. The development poses risks for yen carry trades that have dominated market positioning.