USD/JPY whipsaws at multi-month high below 145.00 on Fed Chair Powell speech

• USD/JPY initially refreshed seven-month high before reversing of late, still up for the third consecutive day.
• Fed Chair Powell’s speech repeats the previous day’s hawkish remarks about interest rate hikes.
• Upbeat Japan data fails to inspire Yen pair buyers amid dovish BoJ bias.
• Second-tier US data, Japan inflation and bond market moves eyed for clear directions.

USD/JPY portrays nearly 20 pips of seesaw momentum after Federal Reserve (Fed) Chairman repeats the previous day’s comments on early Thursday morning in Europe. That said, the Yen pair rose to the highest levels since November 2022 before retreating from 144.70, around 144.60 at the latest.

“A strong majority of Fed policymakers expect two or more rate hikes by year-end,” said Fed Chair Jerome Powell while speaking at the Fourth Conference on Financial Stability hosted by the Bank of Spain, in Madrid.

It should be noted, however, that his comments suggesting, “Bank stresses that emerged in March 'may well lead' to a further tightening in credit conditions,” seemed to have triggered the USD/JPY pair’s retreat from the multi-day top afterward.

On the other hand, Japan’s upbeat data also prod the Yen pair buyers. That said, Japan's Consumer Confidence Index for June matches 36.2 forecasts, versus 36.0, whereas Japan’s Retail Trade growth jumps to 5.7% YoY for May versus 5.4% expected and 5.1% prior (revised).

Furthermore, fears of the Japanese government’s intervention to defend the Yen, as the policymakers have recently shown readiness to do it in case of emergency, also seem to prod the USD/JPY bulls.

Even so, dovish comments from Bank of Japan (BoJ) Governor Kazuo Ueda and upbeat US Treasury bond yields keep the USD/JPY buyers hopeful. That said, “(There is) still some distance to go in sustainably achieving 2% inflation accompanied by sufficient wage growth,” said BoJ’s Ueda while also adding that the Japanese economy is going to expand slightly above potential for some time. Talking about the yields, the US 10-year and two-year Treasury bond yields consolidate the previous day’s losses around 3.48% and 4.75% at the latest.

Moving on, USD/JPY pair traders will pay attention to the revised version of the US Gross Domestic Product (GDP) for the first quarter (Q1) 2023, as well as the second-tier US employment and activity data, for clear directions.

Technical analysis

USD/JPY remains within a fortnight-old bullish channel, currently between 143.85 and 145.50, which in turn keeps the Yen pair buyers hopeful.