• USD/JPY is eyeing more upside amid rising US Treasury yields and Fed’s policy tightening expectations.
• A multi-year high preliminary estimate of US CPI at 8.5% will strengthen the greenback further.
• Apart from the US CPI, investors will also focus on Japan’s PPI.

The USD/JPY pair displayed a sheer upside move on Monday and continued its six-day winning streak. The pair have established firmly above 125.00 and is likely to extend its gains after overstepping Monday’s high at 125.77. Higher likely US Consumer Price Index (CPI) print and broader weakness in the Japanese yen have infused fresh blood into the asset.

The mighty greenback is performing strongly against Tokyo as the street is expecting a print of multi-decade high by the US inflation at 8.5%. The US Bureau of Labor Statistics reported the previous US CPI figure at 7.9%. Galloping inflation in the US economy has left no other option for the Federal Reserve (Fed) than to raise the interest rate significantly.

The latest Reuters poll of economists dictates a consecutive 50 bps interest rate hike for May and June, considering the likely fresh multi-decade high US inflation at 8.5%.

Meanwhile, the US dollar index (DXY) is struggling to balance above 100.00 amid uncertainty over the release of the US CPI. On the yield front, the 10-year US Treasury yields have climbed to near 2.80 on rising odds of a tightening monetary policy by the Federal Reserve (Fed).

Although, US CPI will remain the major driver investors will also focus on Japan’s Producer Price Index (PPI) data. The monthly and yearly Japan PPI data are likely to land at 0.9% and 9.3% respectively.