Japanese Yen slips as markets await US CPI inflation figures and US-Iran negotiations

USD/JPY Gains Amid Geopolitical Tensions and Key US Inflation Data

During early European trading on Friday, the USD/JPY currency pair advanced toward the 159.30 level as buyers stepped in. The US Dollar found some support against the Japanese Yen, partly due to a tentative ceasefire between the United States and Iran.

Market participants are now focused on the upcoming US Consumer Price Index (CPI) report, scheduled for release later in the day. This data is expected to influence the Federal Reserve’s outlook on maintaining higher interest rates for an extended period. Analysts anticipate that headline CPI inflation will climb to 3.3% year-over-year in March, up from 2.4% in February, largely fueled by surging oil prices amid ongoing conflict in the Middle East.

Additionally, the core CPI is forecasted to increase to 2.7% in March, compared to 2.5% previously. If US inflation data exceeds expectations, it could further strengthen the US Dollar against the Yen in the short term.

On Thursday, US President Donald Trump expressed confidence that Iran would adhere to the terms of the ceasefire ahead of scheduled negotiations this weekend. He also cautioned that failure to comply could result in significant military action against Iran.

All eyes are on the pivotal discussions between US and Iranian officials set for Saturday in Pakistan. The US delegation will include Vice President JD Vance, special envoy Steve Witkoff, and Jared Kushner.

Meanwhile, Japanese Prime Minister Sanae Takaichi announced on Friday that the government is considering releasing around 20 days’ worth of additional oil reserves starting in early May. This initiative aims to ensure stable energy supplies at home, as shipping disruptions continue in the Strait of Hormuz.