The Japanese Yen loses traction after BoJ Deputy Governor Uchida’s remarks.

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• The Japanese Yen loses traction after BoJ Deputy Governor Uchida’s remarks.
• A positive risk tone further undermines the JPY and lends support to USD/JPY.
• The uncertain Fed rate cut path weighs on the USD and should cap the upside.

The Japanese Yen (JPY) ticks lower against its American counterpart for the second straight day on Thursday, though remains confined in a familiar range held since the beginning of this week. The Bank of Japan (BoJ) Deputy Governor Uchida Shinichi sounded less hawkish today and said that the central bank will not hike aggressively upon ending negative rates. This, along with the prevalent risk-on mood, undermines the safe-haven JPY, though subdued US Dollar (USD) price action acts as a headwind for the USD/JPY pair.

A slew of influential Federal Reserve (Fed) officials recently indicated that the central bank is in no hurry to start lowering borrowing costs in the wake of the resilient US economy. That said, the prospects for an imminent shift in the Fed’s policy stance keep the USD bulls on the defensive below the highest level in almost three months. Furthermore, hopes that wage growth this year may outpace that of 2023 and pave the way for the BoJ to exit its decade-long ultra-loose policy contribute to capping gains for the USD/JPY pair.

From a technical perspective, bears need to wait for some follow-through selling below the 100-day Simple Moving Average (SMA), currently pegged near the 147.60-147.55 region, before positioning for deeper losses. The USD/JPY pair might then accelerate the fall to the 147.00 mark before dropping to the 146.35 intermediate support en route to sub-146.00 levels, or the monthly low touched last week.

Meanwhile, positive oscillators validate the positive outlook for the USD/JPY pair, though the formation of multiple-tops near the 148.75-148.80 region warrants caution for bullish traders. Hence, a sustained strength beyond the said barrier might trigger a fresh bout of a short-covering rally and lift spot prices to the 149.55-149.60 intermediate hurdle en route to the 150.00 psychological mark.

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