USD/JPY remains under pressures near 150.50, US core PCE Inflation heats up

• USD/JPY continues to face selling pressure even though the US core PCE inflation for February came in higher-than-expected.
• Investors brace for reciprocal tariffs from the US to be unveiled by President Donald Trump on Wednesday.
• Hotter-than-expected Tokyo CPI data has strengthened the Japanese Yen.

The USD/JPY pair is down more than 0.3% near 150.50 in North American session on Friday. The pair remains on the backfoot even though the United States (US) core Personal Consumption Expenditure Price Index (PCE) data for February has come in hotter-than-expected. The US core PCE Inflation - which excludes volatile food and energy - items rose at a faster pace of 2.8% year-on-year compared to estimates of 2.7% and the prior release of 2.6%.

The Federal Reserve (Fed) also anticipated its preferred inflation gauge to average at 2.8% by the year-end in the last week's monetary policy meeting in which it left interest rates in their current range of 4.25%-4.50% and guided that they are not in a hurry to make adjustments due to lack of clarity on US President Donald Trump's tariff agenda.

Hotter-than-projected US core PCE inflation data is expected to boost expectations for the Fed hold borrowing rates at their current levels for an extended period.

Meanwhile, investors brace for the announcement of reciprocal tariffs by US President Trump on Wednesday. Trump is poised to unveil a detailed tariff plan for his all trading partners to fix bloated trade deficit. Market participants expect Trump tariffs to result in an economic slowdown and a resurgence in inflationary pressures across the globe.

On the Japanese Yen (JPY) front, hot Tokyo Consumer Price Index (CPI) data for March has prompted expectations of more interest rate hikes by the Bank of Japan (BoJ) this year. Hot inflation data has also strengthened the Japanese Yen against its peers.

Tokyo CPI data rose by 2.9% in 12 months to March, faster than 2.8% growth seen in February. Japan's capitals CPI data - which excludes Fresh Food - accelerated by 2.4% against estimates and the former release of 2.2%.