USD/JPY Stalls Below 158.00 as Bulls Remain Cautious Am

During the Asian session on Wednesday, the USD/JPY pair fluctuated within a narrow range, trading just below the 158.00 mark. Despite the release of the Bank of Japan (BoJ) April meeting minutes, spot prices remained relatively unchanged, staying close to the highest level since late April, which was retested the previous day.

The minutes revealed that BoJ board members discussed the risks posed by the weak Japanese Yen (JPY) on underlying inflation and mentioned the possibility of raising interest rates sooner than expected if inflation exceeds targets. However, this did not significantly boost the JPY or provide a strong impetus for the USD/JPY pair. At the same time, the subdued US Dollar (USD) price action acted as a headwind for spot prices.

The USD Index (DXY), which measures the Greenback against a basket of currencies, remained near the weekly low reached following weaker US Retail Sales data released on Tuesday. This data indicated signs of fatigue among US consumers, increasing expectations for a potential rate cut by the Federal Reserve (Fed) later this year. This sentiment contributed to the overnight decline in US Treasury bond yields and kept USD bulls on the defensive.

Meanwhile, BoJ Governor Kazuo Ueda's hawkish comments on Tuesday, suggesting that the central bank could raise rates in July depending on economic data, supported the JPY. Additionally, speculation that Japanese authorities might intervene to support the domestic currency further limited the upside for the USD/JPY pair. As a result, any upward movement is likely to attract sellers and remain constrained.

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Paraphrasing text from "FX Street" all rights reserved by the original author.