USD/JPY Squeezes Toward 2024 Highs as Yen Weakens Despite BoJ Rate Hike

USD/JPY continues its upward trajectory, squeezing toward 2024 highs as the Japanese yen struggles to find support despite the Bank of Japan's rate hike earlier this week. The pair's resilience reflects market skepticism about sustained BoJ tightening, particularly as Japan's inflation data remains underwhelming. Friday's May CPI release is the key event, with both headline and core inflation measures having printed below the BoJ's 2% target for four consecutive months, undermining the case for further policy normalization. The session also features BoJ minutes from the April meeting, which may offer additional insight into the central bank's inflation outlook. New Zealand CPI data kicks off the Asian calendar. Liquidity conditions are expected to be thinner than usual, with Hong Kong and China on holiday and US markets closed for Juneteenth. Traders should exercise caution given the reduced liquidity environment, which could amplify volatility around the Japanese inflation print. A soft CPI reading would likely add further downside pressure on the yen, potentially pushing USD/JPY to fresh multi-year highs.