The Japanese Yen strengthens a bit in reaction to verbal intervention by Japanese authorities.

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• The Japanese Yen strengthens a bit in reaction to verbal intervention by Japanese authorities.
• The risk-off impulse further benefits the safe-haven JPY and exerts some pressure on USD/JPY.
• The hotter-than-expected US CPI reaffirms hawkish Fed expectations and favours the USD bulls.

The Japanese Yen (JPY) attracts some buyers during the Asian session on Wednesday after some verbal intervention from the Japanese authorities and recovers a part of the overnight heavy losses against its American counterpart. Apart from this, the risk-off impulse – as depicted by a steep decline across the global equity markets – allows the safe-haven JPY to recover a bit from a three-month low touched the previous day. That said, the recent dovish remarks by the Bank of Japan (BoJ) Deputy Governor Shinichi Uchida might hold back bulls from placing aggressive bets. Apart from this, a strong bullish tone around the US Dollar (USD) might also contribute to limiting the downside for the USD/JPY pair.

The stronger-than-expected US consumer inflation data released on Tuesday reaffirmed market expectations that the Federal Reserve (Fed) will keep interest rates higher for longer. This, in turn, remains supportive of elevated US Treasury bond yields and assists the USD Index (DXY), which tracks the Greenback against a basket of currencies, to stand tall near its highest level since November 14. Furthermore, the widening of the US-Japan rate differential might hold back traders from placing bullish bets around the JPY, suggesting that the path of least resistance for the USD/JPY pair is to the upside.

From a technical perspective, the overnight strong move-up was seen as a fresh trigger for bulls and might have already set the stage for additional gains. That said, the Relative Strength Index (RSI) on the daily chart is hovering close to the overbought zone and warrants some caution. Any further corrective slide, however, is likely to attract fresh buyers near the 150.30 area, which should limit losses for the USD/JPY pair near the 150.00 mark. The latter should act as a key pivotal point, which if broken might prompt some technical selling and drag spot prices further towards the 149.65-149.60 region.

On the flip side, the 150.90 area, or a multi-month peak touched on Tuesday, now seems to act as an immediate hurdle. A sustained strength beyond could lift the USD/JPY pair further towards the 151.45 intermediate hurdle en route to the 152.00 neighbourhood, or a multi-decade peak set in October 2022 and retested in November 2023.

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