US Dollar Awaits CPI Catalyst as USD/JPY Rebounds Toward 158

The US dollar is trading in a tight range ahead of the US CPI report, with markets focused on whether higher oil prices linked to the Iran conflict will continue pushing inflation higher. Elevated energy prices are keeping inflation concerns alive, but the broader bearish outlook for the dollar still remains in place for now.

Markets expect US core CPI to rise slightly, and a stronger-than-expected inflation reading could temporarily support the dollar by increasing expectations for higher interest rates. A softer CPI report could quickly renew selling pressure on the USD.

Technically, the US Dollar Index is holding above key support near 97.50 and could see a short-term rebound toward the 98.40 resistance area before sellers potentially return. A break below support could expose deeper downside toward 96.30.

USD/JPY is also rebounding toward the important 158 resistance zone after intervention from Japan’s Ministry of Finance. While short-term momentum has improved, intervention risks near 158 continue to keep downside risks elevated, with bears still watching price action for a possible move toward the 200-day EMA and lower levels.

Bottom line: US CPI is likely to decide the next short-term move for the dollar. Strong inflation data could support a temporary USD rebound, while softer inflation may strengthen the broader bearish dollar trend.

USD/JPY Daily Chart