USD/JPY Holds Bullish Bias Ahead of BOJ and U.S. Inflation Data

Markets are widely expecting the Bank of Japan to raise interest rates by 25 basis points next week. If the BOJ chooses to support the bond market instead of allowing yields to rise, the yen could remain under pressure despite higher interest rates. At the same time, elevated U.S. yields and expectations of further Fed tightening continue to favour a stronger U.S. dollar.

Technically, USD/JPY remains in a strong uptrend with buyers consistently stepping in on dips. Momentum indicators remain positive, and a retest of the 2026 high near 160.73 looks likely, with 161.95 as the next major upside target. On the downside, the 158.80 support zone remains key. Upcoming U.S. CPI and PPI data could add further volatility, but unless they significantly weaken expectations for Fed policy, the overall outlook continues to favour USD/JPY strength.

USD/JPY Daily Chart