The Japanese Yen continues with its struggle to gain any meaningful traction on Wednesday.

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• The Japanese Yen continues with its struggle to gain any meaningful traction on Wednesday.
• Intervention fears act as a tailwind for the JPY, though the BoJ monetary policy uncertainty caps the upside.
• Traders look to the FOMC minutes for cues about the Fed’s rate-cut path and a fresh impetus.

The Japanese Yen (JPY) extends the sideways consolidative price move during the Asian session on Wednesday and remains confined in a one-week-old range against its American counterpart. The recent slump below the 150.00 psychological mark prompted some verbal intervention from the Japanese authorities, which, along with the cautious market mood, underpins the safe-haven JPY. Meanwhile, expectations that the Federal Reserve (Fed) will start cutting interest rates in the coming months keep the US Dollar (USD) bulls on the defensive near a two-week low touched on Tuesday and further contribute to capping the USD/JPY pair.

That said, a recession in Japan fuelled uncertainty about the likely timing of when the Bank of Japan (BoJ) will exit the negative interest rates policy. Apart from this, the latest optimism that additional stimulus from China could boost global growth holds back traders from placing bullish bets around the JPY and helps limit the downside for the USD/JPY pair. Moreover, investors opt to wait on the sidelines ahead of the FOMC meeting minutes, due for release later during the North American session, which will be looked for cues about the Fed’s rate-cut path. This, in turn, will influence the USD and provide a fresh impetus to the currency pair.

From a technical perspective, the recent range-bound price action warrants some caution before positioning for a firm near-term direction. That said, the recent breakout through the 148.70-148.80 horizontal barrier favours bullish traders. Moreover, oscillators on the daily chart are holding in the positive territory and are still away from the overbought zone, validating the constructive outlook for the USD/JPY pair. It, however, will still be prudent to wait for some follow-through buying beyond the mid-150.00s and the 150.85-150.90 region, or a multi-month top set last week, before positioning for any further gains. Spot prices might then climb to 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.

On the flip side, weakness below the mid-149.00s could attract some buyers near the 149.25-149.20 area. This is followed by the 149.00 round figure and the 148.80-148.70 resistance-turned-support, which should act as a key pivotal point. A convincing break below the latter will suggest that the USD/JPY pair has formed a near-term top and set the stage for some meaningful corrective decline. The subsequent downfall has the potential to drag spot prices to the 148.35-148.30 region en route to the 148.00 mark and the 100-day Simple Moving Average (SMA) support near the 147.70 zone.

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