USD/JPY Consolidates Amid Cooling Inflation and Fed Expectations

The Japanese Yen remains relatively unchanged as traders navigate opposing forces in the market. The US inflation data has shown signs of cooling, which is offset by expectations of further Federal Reserve rate hikes.

This contradiction continues to keep the USD/JPY pair within a tight range in the mid-159.00s. On one hand, the support from the Fed's tightening expectations lends a floor to the US Dollar, but on the other hand, the weakening inflation data is tempering this support.

Middle East uncertainty and Friday's Japanese GDP preview are also contributing to a cautious mood among traders. Attention will turn to Japan's economic growth figures, expected to show expansion for a third-straight quarter in Q2.