Japanese Yen draws support from hot Tokyo CPI as USD bulls await US NFP report

The USD/JPY pair edges lower during the Asian session on Friday, currently trading below the 158.00 mark, though it remains near the weekly high touched the previous day.

Data released earlier today showed that consumer inflation in Tokyo – Japan's capital city – accelerated in September. This comes on top of the Bank of Japan's (BoJ) Summary of Opinions, which showed that policymakers debated the need for additional rate hikes to adjust accommodative financial conditions, and offers some support to the Japanese Yen (JPY). Adding to this, traders remain on high amid speculation that authorities will step in again to boost the JPY, which, in turn, is weighing on the USD/JPY pair.

The downside, however, seems cushioned amid the prevailing strong bullish sentiment surrounding the US Dollar (USD). Despite receding bets for an October Federal Reserve (Fed) rate hike, inflationary concerns stemming from volatile energy prices help limit the overnight pullback in US bond yields from multi-year highs. This, along with persistent geopolitical uncertainties, keeps the safe-haven USD well supported near its highest level since March 2025 and might continue to act as a tailwind for the USD/JPY pair.

Traders might also refrain from placing aggressive directional bets and opt to wait for the release of the crucial US monthly employment details, due later during the North American session. The popularly known Nonfarm Payrolls (NFP) report will play a key role in influencing market expectations about the Fed's future policy path, which, in turn, will drive the USD and provide some meaningful impetus to the USD/JPY. Nevertheless, spot prices remain on track to register modest gains for the third consecutive week.

USD/JPY 4-hour chart

Technical Analysis

The USD/JPY pair holds well above the 100-period Simple Moving Average (SMA) on the 4-hour chart, suggesting a constructive near-term bias as buyers maintain control over the broader uptrend. The said SMA at 156.52 should act as immediate strong support, where a break lower would start to weaken the bullish structure and expose deeper retracements. On the top side, bulls might now await acceptance above the 159.00 mark before positioning for an extension of a three-week-old uptrend.