USD/JPY appears poised for upward momentum to gather after the U.S. CPI data on Wednesday.

The pair is currently flirting with its 200-day moving average and the key pivot level of 152, as Treasury yields firm ahead of the inflation release.

USD/JPY's progress will largely depend on how the data influences risk-taking.
Recent yen sellers are anticipating that policy easing outside Japan, including a potential Fed rate cut next week, will support global growth and boost commodity prices.
Additionally, expectations that the Bank of Japan will delay its hike until the New Year are fueling bullish sentiment.

Consequently, USD/JPY has been tracking progress in reflation trades, such as rising gold prices, a stronger yuan, and a steeper Treasury curve.

However, this favorable backdrop could face pressure if the yield curve flattens and risk appetite unexpectedly deteriorates after the November inflation print, with the headline estimate 0.3% month-on-month.

A more likely scenario is that rising Treasury 10-year yields will continue to drive upward momentum more than carry-related yen sales.
Low levels of futures open interest suggest that traders are hesitant to reengage in the latter and challenge Japanese authorities.

Near-term levels to watch above 152 include the 21-day moving average at 152.75, the Oct.
23 high at 152.19, and the weekly cloud top at 153.15.
A drop back below 151 and the daily cloud top of 150.52 would neutralize the bullish outlook.

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