USD/JPY Holds Tight Range as Markets Await Key Japanese CPI Data

USD/JPY continues to trade within a clearly defined range as markets position ahead of the upcoming Japanese Consumer Price Index release, a critical data point that could influence the Bank of Japan's monetary policy trajectory. Despite renewed Middle East tensions, the Japanese yen has notably failed to attract its traditional safe-haven bid, suggesting that yield differentials and BOJ policy expectations are outweighing geopolitical risk factors in the near term. On the intraday timeframe, the pair remains locked in consolidation, with traders reluctant to establish directional positions ahead of the inflation print. A hotter-than-expected CPI reading could bolster expectations for further BOJ tightening, potentially driving yen strength and pushing USD/JPY toward the lower end of its range. Conversely, a soft inflation figure would likely reinforce the current range-bound dynamics and support the pair near its upper boundary. Key technical levels and the divergence between Fed and BOJ policy paths remain the dominant forces for USD/JPY directional clarity in the near term.