USD/JPY rises on Tokyo inflation surge; US-China trade tensions weigh

USD/JPY advanced 0.4% to 157.20 during Asian trading as Tokyo's core CPI accelerated well above 3%, reinforcing expectations for potential Bank of Japan policy normalization. The inflation data sparked yen selling initially as traders positioned for a widening rate differential with the US. However, gains were capped by Treasury Secretary nominee Bessent's comments that US-China trade talks have stalled, raising concerns about regional economic stability. The development adds uncertainty to Asian currencies broadly, with potential spillover effects on risk sentiment. Technical indicators show USD/JPY approaching key resistance at 157.50, while support lies at 156.80. The conflicting forces of Japanese inflation pressures and geopolitical tensions create a complex trading environment. Traders should monitor upcoming BOJ commentary and any developments in US-China relations for directional cues.