Japanese yen struggles to capitalize on the rebound inspired by domestic inflation data

• The Japanese Yen attracts some buyers as the strong national CPI reaffirms the bets for a rise in boxwood.
• Commercial uncertainties and the increase in geopolitical tensions also benefit JPY’s safe refuge status.
• A weaker USD contributes to the fall of the USD/JPY torque from the monthly maximum.

The Japanese Yen (JPY) advances in front of his American counterpart during Friday’s Asian session and moves away from the monthly minimum reached the previous day. Government data published in Japan showed that the National Annual Consumer Price Index (CPI) remained well above the 2% target of the Bank of Japan (BOJ) in May. This reaffirms the bets of the market that the BOJ will raise interest rates and turn out to be a key factor that provides a slight impulse to the JPY.

Meanwhile, the persistent uncertainties related to trade and a greater escalation of geopolitical tensions in the Middle East continue weighing in the feeling of investors, which further supports JPY as a safe refuge. In addition, a modest fall in the US dollar (USD) drags the USD/JPY torque closer to the 145.00 psychological brand. However, the expectations that the BOJ could be kept waiting until the first quarter of 2026 and the Hard Line Pause of the Federal Reserve (FED) earlier this week could limit losses for the pair.

The Japanese Yen receives support from the strongest numbers of national consumer inflation and secure refuge purchases

• The Japan Statistics Office reported Friday that the National Consumer Price Index (CPI) rose 3.5% year -on -year in May, compared to the previous reading of 3.6%. Meanwhile, the underlying national CPI, which excludes volatile prices from fresh food, increased from 3.5% year -on -year in April and grew 3.7% last month, marking the highest level since January 2023.
• More details revealed that an underlying reading that excludes both fresh food and energy prices, and that is closely followed by the Bank of Japan as an indicator of underlying inflation, rose 3.3% year -on -year in May from 3.0% of the previous month. The strongest IPC figures point to expanding inflationary pressures in Japan and give the BOJ more impulse to raise interest rates in the coming months.
• However, the BOJ earlier this week pointed out its preference for caution in the normalization of a monetary policy still easy and decided to reduce the rhythm of its bond purchases from fiscal year 2026. In addition, the gloomy economic perspective and uncertainty about the tariffs of US President Donald Trump suggest that the BOJ could renounce the interest rates in 2025.
• The Federal Reserve, on the other hand, projected two cuts of fees by the end of 2025, although the officials predict only a cut of 25 basic points in each of 2026 and 2027. In addition, seven of the 19 policy officers indicated that they did not want cuts this year, compared to four in March, in the middle of persistent concerns that the Trump administration tariffs could increase consumer prices.
• Meanwhile, Trump said earlier this week that tariffs in the pharmaceutical sector will arrive soon. This adds a layer of uncertainty in the markets before the deadline of July 9 for greater reciprocal tariffs of the USA. In addition, the increase in geopolitical tensions continues to weigh on the feeling of investors, which, together with the relatively hard expectations of the boxwood, supports the Japanese yen.
• In the geopolitical front, the conflict between Iran and Israel enters its eighth day while Trump considers the participation of the US in the war. According to the White House, Trump said he will allow two weeks for diplomacy to advance before deciding whether to launch an attack against Iran. European Foreign Ministers are expected to meet with Iranian officials on Friday and press them to decline.

The USD/JPY could attract buyers in setback; The night break through a short -term range remains at stake

From a technical perspective, the consecutive closure of the USD/JPY torque above the psychological brand of 145.00 this week, along with the night movement beyond the previous monthly peak, around the 145.45 area, it was seen as a new trigger for the bulls. In addition, the oscillators in the daily chart have begun to gain positive traction and suggest that the lower resistance path for cash prices remains up. Therefore, any additional setback could be seen as a purchase opportunity near the area of ​​144.50-144.45. This, in turn, should help limit losses near the round figure of 144.00. However, a convincing rupture below the latter would deny the positive perspective and change the short -term bias in favor of the bassists.

On the contrary, the 145.75 area, or the monthly maximum reached on Thursday, could act as an immediate obstacle before the 146.00 mark. This is closely followed by the peak of May 29, around the region of 146.25-146.30, above which the USD/JPY torque could aspire to challenge the single mobile average (SMA) of 100 days, currently located just ahead of the round figure of 147.00. A shopping monitoring could pave the way for a movement towards the intermediate obstacle of 147.40-147.45 on a route to the 148.00 mark and the region of 148.65, or the monthly Mayor of May.