USDJPY is under selling pressure due to a weaker USD.

The USDJPY pair extends its overnight retracement slump from 151.70, its highest level since October 2022. And falls for the second day in a row on Thursday. Spot prices are currently trading just above the 150. Psychological level, down more than 0.50% on the day. However a substantial corrective dip remains elusive.

Expectations that the Fed would raise interest rates, as well as falling US bond yields, weigh on the greenback.

Expectations that the Federal Reserve (Fed) is reaching the end of its policy cycle. As a result of its policy-tightening campaign. The US Dollar (USD) has fallen from a near one-month high reached on Wednesday. Putting pressure on the USDJPY pair. The Federal Reserve of the United States held key overnight interest rates steady for the second day in a row. But left the door open for further rate hikes in the wake of unanticipated US economic resiliency.

However, in the post-meeting news conference. Fed Chair Jerome Powell stated that the recent market-driven rise in borrowing prices could have an impact on economic activity.

The Fed-BoJ policy divergence should limit JPY gains and minimize the major’s downside.

Powell also stated that financial conditions may already be tight enough to limit inflation, increasing speculation that the Fed is done hiking rates and may begin decreasing rates by June of next year. The revaluation of The Fed’s rate-hike path in the future leads to a further precipitous decrease in US Treasury bond yields, which continues to weigh on the Greenback. Aside from that, suspicions that Japanese authorities will interfere in the FX market to counteract a protracted depreciation of the native currency add to the offered tone around the USDJPY pair, while the Bank of Japan’s (BoJ) dovish posture may assist limit losses.

The Bank of Japan’s slight tweak to its yield curve control (YCC) policy indicated a cautious transition away from years of heavy stimulus. The Japanese central bank also stated that the exit from the ultra-dovish position will take longer than anticipated. This represents a significant departure from a relatively hawkish Fed, which, together with The unappealing nature of Japanese government bonds may undermine the Japanese yen (JPY).

Furthermore, a generally bullish risk tone could impair the JPY’s safe-haven demand and give some support to the USDJPY pair, so aggressive bearish traders should exercise caution.

Market investors are now looking ahead to the US economic calendar.

Market investors are now looking ahead to the US economic calendar, which includes the typical Weekly Initial Jobless Claims and Factory Orders data later in the early North American session. Aside from that, US bond yields will have an impact on USD price dynamics. And provide some momentum to the USDJPY pair.

Traders will also take cues from the broader risk sentiment to seize short-term opportunities. Ahead of the closely-watched US monthly employment data, known colloquially. As the NFP report, due out on Friday.