USD/JPY trades better bid above 147.00 after dovish BoJ commentary

• USD/JPY is stabilizing above 147.00, having witnessed good two-way action on Tuesday.
• Investors assess Fed rate cut bets after mixed US economic data. US Dollar retreats.
• BoJ policymaker Ryozo Himino’s dovish comments lend support to USD/JPY.

USD/JPY is trading better bid above 147.00 in the Asian session on Wednesday, finding support from a modest uptick in the US Treasury bond yields and dovish comments from Bank of Japan (BoJ) Deputy Governor Ryozo Himino.

Himino said, “the BoJ will patiently maintain the easy policy until the sustained and stable achievement of the price target is in sight.”

Further, a minor rebound in the US Treasury bond yields is helping the USD/JPY to stay afloat amid a retreat in the US Dollar across the board. The US Dollar is failing to capitalize on a cautious market environment, as investors weigh US Federal Reserve (Fed) interest rate cut prospects as early as March 2024.

On Tuesday, US JOLTS Job Openings plunged to a two-year low of 8.733 million in October, adding to further evidence of a cooling US labor market. The downbeat data triggered a knee-jerk selling in the US Dollar, which was soon reversed on the back of strong US ISM Services PMI. US ISM Services PMI rose from 51.8 to 52.7 in November, bettering expectations of a 52.0 print.

The swift US Dollar rebound lifted USD/JPY from daily lows of 146.56, as the pair went on to settle Tuesday almost unchanged at 147.20. From a broader perspective, USD/JPY is holding its recovery from three-month lows of 146.23 reached last Friday, tracking the US Dollar upswing.

Meanwhile, markets took note of the latest Japanese inflation data. Tokyo Core Consumer Price Index (CPI) inflation, excluding volatile items such as fresh food, rose 2.3% in November, data from the Statistics Bureau showed on Tuesday. 

The pair tumbled to multi-month troughs on increased expectations that the BoJ will end its negative interest rate policy (NIRP) early next year.

All eyes now turn toward the release of a fresh US employment report, the ADP Employment Change, due later on Wednesday. The data will affirm loosening US labor market conditions. However, the main event risk for this week remains Friday's Nonfarm Payrolls (NFP) data.

USD/JPY Technical levels to consider