USDJPY Rebounds Modestly Below 153.00 as Traders Await US CPI Data

USD/JPY bears remain hesitant, with the pair rebounding slightly during the Asian session on Friday and snapping a four-day losing streak after hitting a more than two-week low near 152.25–152.30. Currently trading just below the 153.00 level, the pair attracts some buyers but lacks strong bullish momentum amid mixed market signals. The Japanese Yen continues to draw support as a safe-haven currency, bolstered by hopes that Prime Minister Sanae Takaichi's fiscally responsible policies will strengthen the economy and encourage the Bank of Japan to maintain its normalization path. Meanwhile, the US Dollar struggles to gain traction, weighed down by reduced expectations for aggressive Fed rate cuts in 2026—despite a strong January Nonfarm Payrolls report—and lingering concerns over the central bank's independence. Traders are staying cautious and avoiding big directional bets ahead of the crucial US CPI data release later today, which could provide fresh clues on the Fed's rate path. Overall, divergent BoJ-Fed policy expectations continue to cap meaningful upside for USD/JPY, positioning the pair for significant weekly losses and suggesting potential further near-term downside pressure on the pair.

Japan’s Nikkei 225 on Thursday hit 58,000 for the first time in history, extending its post-election rally to fresh highs, fueled by renewed confidence in domestic politics and the ruling administration’s economic agenda. The benchmark index subsequently pared gains to close flat at 57,639.84. The broader Topix advanced 0.7% to 3,882.16.