A likely Japanese Yen buying directed by Japan's Ministry of Finance triggered a steep USD/JPY decline to over a two-week low during the late US session on Wednesday, though the momentum falters near the 153.00 mark.
Japan's top currency diplomat Masato Kanda declined to confirm if authorities had stepped into the FX market to support the domestic currency and said that they will disclose intervention data at the end of this month.
Minutes of the Bank of Japan March policy meeting revealed this Thursday that the central bank must continue to support the economy from a financial standpoint to achieve sustained, domestic demand-driven recovery.
The lack of change in forward guidance by the Federal Reserve on Wednesday, signaling that it is leaning toward reductions in borrowing costs later this year, was perceived as dovish and led to the overnight US Dollar slump.
In the post-meeting press conference, Fed Chair Jerome Powell noted that inflation has eased substantially over the past year but it's still too high and that further progress on inflation is not assured as the path is uncertain.
Fed fund futures traders are now pricing in 35 basis points of easing this year, up from 29 bps before the statement, which is still less than three 25 bps cuts projected by the US central bank and helps revive the USD demand.
A positive tone around the US equity markets further contributes to driving flows away from the safe-haven JPY and provides an additional boost to the USD/JPY pair on Thursday ahead of the second-tier US economic releases.
The market attention, meanwhile, remains on the US jobs report on Friday, which will now play a key role in influencing the near-term USD price dynamics and provide some meaningful impetus to the currency pair.
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