**USD/JPY Retreats from Session Highs; Trades Near 156.51 as Dollar Weakness Prevails**
*Based on the article by Rene Lombe, FX Daily Report, with further analysis and context from leading financial sources including Reuters, Investing.com, and Bloomberg.*
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The USD/JPY currency pair slipped back from its intraday highs to trade around 156.51 during the latest Asian trading session as a waning U.S. dollar weighed heavily on the major currency pair. After briefly surging earlier, USD/JPY lost momentum in the face of fresh market signals, cautious sentiment ahead of key economic events, and continued speculation about intervention from Japanese authorities. This analysis explores the recent price action, the underlying macroeconomic drivers, the technical landscape, and market expectations for the pair in the coming days.
## USD/JPY Price Movement: Session Overview
– The USD/JPY currency pair started the Asian session near recent highs, buoyed by earlier U.S. dollar strength.
– During the session, the pair reached an intraday peak around 156.80 before reversing course and moving lower.
– As of publication, USD/JPY was trading near 156.51, down from session highs but still holding above support near 156.30.
### Key Influences on the Recent Price Action
1. **U.S. Dollar Softness**: After recent gains, the dollar index experienced pullbacks as traders reassessed the likelihood of further U.S. Federal Reserve interest rate hikes.
2. **Market Sentiment on Central Bank Actions**: Comments and expectations regarding the Federal Reserve and Bank of Japan (BoJ) remain central to driving short-term price action.
3. **Intervention Fears**: Persistent speculation about potential intervention from Japanese authorities continues to add volatility to the yen.
## U.S. Dollar’s Recent Decline: Underlying Causes
The greenback lost steam after having enjoyed support due to:
– Robust U.S. economic data, especially non-farm payrolls and inflation numbers, which initially strengthened the view that the Fed could delay rate cuts.
– Shifting rhetoric from Fed officials, some of whom suggested that the central bank remains cautious about declaring victory over inflation.
Recently, however, the dollar has faltered on:
– Softer U.S. data points, including retail sales and housing starts, which have started to temper expectations of aggressive monetary policy.
– Renewed optimism in global equites, which encouraged a risk-on mood, reducing safe-haven demand for the dollar.
## Japanese Yen Dynamics: Intervention Watch and BoJ Stance
### Concerns Over Yen Weakness
– The yen remains near multi-decade lows against the U.S. dollar, reflecting persistent negative-yield differentials.
– Japanese authorities, including the Ministry of Finance (MOF) and the Bank of Japan (BoJ), have continued to voice concern over excessive yen depreciation, warning that they are prepared to act if volatility becomes excessive or disorderly.
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