USD/JPY holds steady near 158.00 mark, just below its highest level since late April

• USD/JPY bulls turn cautious near a one-and-half-month peak amid mixed fundamental cues.
• The BoJ’s cautious approach and the upbeat market mood undermine the safe-haven JPY.
• Fed rate-cut uncertainty keeps the USD bulls on the defensive and cap gains for the major.

The USD/JPY pair consolidates around the 158.00 round figure during the Asian session on Thursday and remains well within the striking distance of its highest level since late April touched last week. The mixed fundamental backdrop, meanwhile, warrants some caution before positioning for an extension of the recent appreciating move witnessed over the past two weeks or so. 

The Japanese Yen (JPY) is undermined by the Bank of Japan’s (BoJ) decision to hold off on any discussions around JGB tapering until the next meeting. Apart from this, the underlying bullish tone across the global equity markets is seen denting demand for the safe-haven JPY and lending support to the USD/JPY pair. However, speculations that Japanese authorities might intervene to prop up the domestic currency, along with persistent geopolitical tensions and political uncertainty in Europe, should limit any meaningful downside for the JPY. 

Furthermore, the BoJ Governor Kazuo Ueda’s hawkish remarks earlier this week, saying that the central bank could raise rates in July depending on economic data, might hold back the JPY bears from placing aggressive bets. Meanwhile, the US Dollar (USD) continues with its struggle to attract any meaningful buyers and languishes near the weekly low amid expectations that the Federal Reserve (Fed) will cut interest rates twice this year, bolstered by signs that inflation is subsiding. This might contribute to keeping a lid on the USD/JPY pair. 

Market participants now look to Thursday’s US economic docket, featuring the release of the usual Initial Jobless Claims, the Philly Fed Manufacturing Index and housing market data – Building Permits and Housing Starts. This, along with the US bond yields and Fedspeak, will influence the USD price dynamics and provide some impetus to the USD/JPY pair. Traders will further take cues from the broader risk sentiment to grab short-term opportunities ahead of the Japan National Core CPI and the global flash PMI prints on Friday.