USD/JPY Remained Steady Around The 158.00 Mark, Just Below Its Highest Level Since Late April

USD/JPY consolidated around the 158.00 mark in Asian trading on Thursday, remaining near the highest level since late April hit last week. Meanwhile, with the fundamental backdrop mixed, caution is warranted before setting up positions to extend the upward trend of the past two weeks or so.

The Japanese yen (JPY) was impacted by the Bank of Japan (BoJ) decision not to discuss the reduction of Japanese government bonds until its next meeting. In addition, the underlying bullish tone of global equities also weakened the safe-haven demand for the yen, providing support for the USD/JPY pair. However, speculation that Japanese authorities may intervene to support the currency, coupled with continued geopolitical tensions and an uncertain political outlook in Europe, should limit the yen’s apparent downside.

In addition, hawkish comments from Bank of Japan Governor Kazuo Ueda earlier this week, saying that the central bank may raise interest rates in July depending on economic data, may curb aggressive bets on yen shorts. Meanwhile, the US dollar (USD) continued to struggle to attract key buyers, hovering near a one-week low, supported by expectations that the Federal Reserve (Fed) will cut interest rates twice this year and signs that inflation is retreating. This could keep a lid on the USD/JPY exchange rate.

The focus turns to US economic data on Thursday, including the usual US weekly jobless claims, the Philadelphia Fed manufacturing index and housing market data on building permits and new housing starts. These data, along with US bond yields and Fed speeches, will influence US dollar price dynamics and provide some momentum to the USD/JPY pair. Traders will further look for cues from the broader risk sentiment to take advantage of short-term trading opportunities ahead of the release of Japan’s nationwide core inflation and S&P Purchasing Managers Index on Friday.

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