USD/JPY Declines as Tokyo Inflation Unexpectedly Softens

USD/JPY extended losses following lower-than-expected Tokyo inflation data, which reduced expectations for Bank of Japan policy tightening. Tokyo CPI came in below forecasts, suggesting nationwide Japanese inflation may also undershoot predictions. This development weakens the case for BOJ rate hikes, narrowing the interest rate differential with the US. The pair has broken below key support levels as traders reassess the yen's yield disadvantage. Technical indicators show increasing bearish momentum, with the 50-day moving average now acting as resistance. The softer inflation reading adds to concerns about Japan's economic recovery and may prompt the BOJ to maintain its ultra-loose monetary policy longer than anticipated. Near-term support for USD/JPY lies at recent lows, while resistance has formed at previous support levels. Traders should watch for upcoming BOJ commentary and US economic data for further directional cues.