USD/JPY Stalls at 160 as Markets Wait on US Inflation and Oil Prices

The USD/JPY forecast remains uncertain as markets await US inflation data and developments in oil prices. Despite weaker-than-expected US employment numbers, the pair has recovered to around 159.00, nearing the psychologically important 160.00 level.

The Federal Reserve's data-dependent approach means that individual economic data releases are having a significant impact on market expectations. The upcoming CPI report is particularly crucial, with economists expecting moderate weakness in headline inflation and core inflation remaining steady at 2.5% annually.

US oil prices have been finding support from uncertainty surrounding the Strait of Hormuz, which could keep inflationary pressures elevated and make it harder for the Fed to ease policy, potentially providing an underlying source of support for the greenback.