US PCE Inflation Report Looms Large for USD/JPY

The Japanese yen is trading cautiously around 159.00 against the US dollar as markets await the release of the US Personal Consumption Expenditures (PCE) inflation report.

The PCE data, set to be released later in the day, will provide crucial signals on the Federal Reserve's monetary policy trajectory and influence expectations about US interest rates.

A higher-than-expected reading could reinforce expectations that the Fed will keep interest rates elevated for longer, supporting the US dollar and potentially pushing USD/JPY higher.

Conversely, a softer print might revive bets on rate cuts, weighing on the greenback and offering some relief to the yen.