USD/JPY Eyes CPI Data as Sticky Inflation May Delay Fed Rate Cuts

USD/JPY remains in focus ahead of the upcoming US Consumer Price Index (CPI) release, with sticky inflation readings potentially keeping the Federal Reserve on hold through the summer months. Market participants are closely watching whether January's inflation data will confirm the persistent price pressures that have characterized recent readings, which could extend the Fed's restrictive monetary policy stance well into 2025. The dollar has maintained strength against the yen as expectations for rate cuts continue to be pushed further out on the calendar, with fed funds futures pricing reduced probability of easing before June or July. The Bank of Japan's cautious normalization path adds another layer to the USD/JPY dynamic, as the interest rate differential between the two economies remains a dominant driver. Key resistance for USD/JPY sits near recent highs, while support is anchored around psychological levels below. Traders should prepare for heightened volatility around the CPI print, as any upside surprise could reinforce dollar strength, while a softer reading might trigger a swift repricing of rate cut expectations and weigh on the greenback.