USD/JPY Falls 0.5% as Tokyo Inflation Cools, BoJ Policy Uncertain

USD/JPY declined 0.5% to 153.20 as Tokyo's core inflation unexpectedly cooled to 2.1% from 2.3%, raising questions about the Bank of Japan's hawkish pivot timeline. The softer inflation data reduces pressure on the BoJ to accelerate policy normalization, weighing on yen strength expectations. However, BoJ officials remain vigilant, with Deputy Governor Uchida stating they're monitoring wage-price dynamics closely. The pair found support at the 153.00 psychological level, coinciding with the 21-day moving average. Resistance stands at 154.00, where selling pressure emerged earlier this week. Market positioning shows reduced yen shorts, but traders remain cautious ahead of next week's BoJ meeting minutes. The inflation cooldown suggests the BoJ may maintain its gradual approach to policy adjustment, potentially limiting yen appreciation against the dollar in the near term.