USD/JPY sticks to modest intraday gains just below mid-140.00s, focus shifts to US GDP

• USD/JPY gains some positive traction during the Asian session, albeit lacks bullish conviction.
• The prospects for another Fed rate hike in September lend some support to the USD and the pair.
• Investors now look to the US Q2 GDP for a fresh impetus ahead of the BoJ decision on Friday.

The USD/JPY pair attracts some buying during the Asian session on Thursday and reverses a part of the previous day's slide to the weekly low touched in the aftermath of the highly-anticipated FOMC decision. Spot prices currently trade just below mid-140.00s, up 0.15% for the day, and for now, seems to have stalled the recent pullback from the vicinity of the 142.00 mark.

The Federal Reserve (Fed) as was widely expected, raised interest rates by 25 bps to the 5.25%- to 5.50% range, or the highest in 22 years, citing still-elevated inflation as a rationale. In the accompanying policy statement, the Fed said that the committee will continue to assess additional information and its implications for monetary policy. Furthermore, Fed Chair Jerome Powell, during his post-meeting press conference, said the economy still needs to slow and the labour market to weaken for inflation to credibly return to the 2% target, leaving the door open for another rate hike in September. This, in turn, is seen lending some support to the US Dollar (USD) and acting as a tailwind for the USD/JPY pair.

The Japanese Yen (JPY), on the other hand, is undermined by expectations that the Bank of Japan (BoJ) will retain its easy-money policy. The BoJ Governor Kazuo Ueda, however, reiterated on Wednesday that the central bank will stick to its accommodative monetary stance and added that the long-term yield rate remains stable under the yield curve control (YCC) policy. This, along with the underlying bullish sentiment across the global equity markets, dents the JPY's relative safe-haven status and further contributes to a mildly positive tone surrounding the USD/JPY pair.

The intraday uptick, however, lacks bullish conviction, warranting some caution before positioning for any further intraday appreciating move. Market participants now look to the release of the Advance US Q2 GDP print for a fresh impetus later during the early North American session. Thursday's US economic docket also features the release of the usual Weekly Initial Jobless Claims, Durable Goods Orders and Pending Home Sales data. The focus, however, will remain on the BoJ monetary policy update and the US Core PCE Price Index - the Fed's preferred inflation gauge on Friday.

Technical levels to watch