USD/JPY Rises as Japan CPI Climbs, BoJ Rate Hike Expectations Mount

USD/JPY traded modestly higher at 157.20, gaining 0.2% despite Japan's November CPI accelerating to 2.9% year-over-year from 2.3% previously, exceeding the Bank of Japan's 2% target. The stronger inflation data has intensified speculation about a potential BoJ rate hike at next week's policy meeting, with markets pricing in a 60% probability of a 25-basis-point increase. The yen's gains were limited by persistent US dollar strength and Japan's cautious monetary policy approach. Technical indicators suggest immediate resistance at 157.50, while support lies at 156.80. The pair faces downward pressure as rate differential narrowing between the Fed and BoJ could favor yen strength. Traders are closely monitoring BoJ Governor Ueda's comments for policy signals ahead of the December 19 meeting, with a hawkish shift potentially triggering a more substantial yen rally.