USD/JPY ended Thursday with a modest gain, bolstered by rising U.S. Treasury yields and equities following a strong U.S. flash PMI report. The data reinforced the dollar’s safe-haven appeal, while the yen failed to capitalize on Japan’s slightly improved PMI readings and inflation figures. With core CPI above the BOJ’s 2% target, expectations for a December rate hike have risen, reflected in OIS pricing of a 15bps increase. However, markets remain cautious as traders await further confirmation from Tokyo CPI and Japan Services PPI next week.

From a technical perspective, USD/JPY continues to trade within a consolidation range of 152-157, with no significant breakout to signal a shift in momentum. The daily conversion line at 155.02 serves as immediate resistance, while the 21-DMA at 153.78 provides key support. The subdued yen volatility across most tenors highlights reduced appetite for large directional moves, although elevated one-year yen call demand indicates some hedging for medium-term risks.

Market focus is likely to shift to U.S. PCE inflation data next week, which could influence expectations for the Federal Reserve’s policy direction. Additionally, Tokyo CPI data could heighten the odds of a hawkish BOJ pivot if inflation remains elevated. Until either support or resistance levels are breached, USD/JPY is expected to remain range-bound, with traders turning to yen crosses like EUR/JPY for potential directional plays.