The USD/JPY pair remained below the 158.00 level on Wednesday, as fresh Tokyo CPI inflation data suggested a slight cooling in price pressures. Core consumer prices in Tokyo, a leading indicator of Japan’s nationwide inflation, rose 2.9% year-over-year in December, down from 3.3% in November and marking a slowdown for the second consecutive month.
The data underscores the Bank of Japan’s ongoing challenge of balancing price stability with its ultra-loose monetary policy. While inflation remains above the BOJ’s 2% target, the pace of deceleration raises questions about the sustainability of price growth. The yen saw muted movement in response, with traders awaiting additional cues from upcoming U.S. economic releases, including the PCE price index later this week.
Markets are assessing whether the USD/JPY pair could regain upward momentum or remain capped amid diverging monetary policy outlooks between the Federal Reserve and the BOJ. For now, the currency pair continues to trade in a tight range, reflecting cautious sentiment among investors.
