USD/JPY Consolidates Near 158.00, Approaching Late

The USD/JPY pair is consolidating near the 158.00 mark in Asia on Thursday, holding close to its highest level since late April reached last week. With a mixed fundamental backdrop, caution is advised before positioning for further gains observed over the past fortnight.

The Japanese Yen (JPY) faces pressure after the Bank of Japan (BoJ) deferred discussions on JGB tapering to its next meeting. Additionally, strong bullish sentiment in global equity markets is reducing demand for the safe-haven JPY, supporting the USD/JPY pair. However, concerns persist that Japanese authorities could intervene to strengthen the JPY, alongside geopolitical tensions in Europe, which may curb significant downside for the JPY.

Moreover, BoJ Governor Kazuo Ueda's recent hawkish comments, suggesting potential rate hikes in July based on economic indicators, could restrain bearish sentiment towards the JPY. Meanwhile, the US Dollar (USD) struggles to gain traction and remains near weekly lows amid expectations that the Federal Reserve (Fed) will cut interest rates twice this year due to easing inflation pressures, which could limit USD/JPY gains.

Investors are now focusing on Thursday's US economic calendar, including Initial Jobless Claims, the Philly Fed Manufacturing Index, and housing data (Building Permits and Housing Starts). These releases, alongside US bond yields and Federal Reserve commentary, will influence USD price movements and provide direction for the USD/JPY pair. Short-term trading opportunities will also hinge on broader market sentiment ahead of Japan's National Core CPI and global flash PMI readings due on Friday.

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