USD/JPY edges higher above 157.00 amid holiday in Japan

• USD/JPY gathers strength to near 157.30 in Thursday’s Asian session. 
• The bets on fewer cuts by the Fed this year support the USD. 
• BoJ's Ueda expected further progress in hitting the price target this year. 

The USD/JPY pair gains ground to around 157.30 during the early Asian trading hours on Thursday. The anticipation of the US interest rates staying higher for longer lifts the US dollar (USD) against the Japanese Yen (JPY). Markets in Japan are closed for the rest of the week. On Friday, the US S&P Global Manufacturing PMI for December will be closely watched. 

The US Dollar Index (DXY), which measures the value of the USD against its six major peers, currently trades near 108.36. Traders continue to digest the Federal Reserve's (Fed) hawkish rate cut by a quarter point at the December meeting. Analysts expect that some of Trump's policy proposals, including tariffs, could lead to higher inflation. Fed Chair Jerome Powell stated that it's too early to predict that, highlighting the central bank to be cautious about further cuts in interest rates. A wide interest rate difference between the US and Japan acts as a tailwind for the pair in the near term. 

The Bank of Japan (BOJ) Governor Kazuo Ueda said last week that the central bank expects the Japanese economy to move closer to sustainably achieving the 2% inflation target this year. The BOJ will release its quarterly report on regional economic conditions next week, which will most likely include a view of whether wage hikes are spreading countrywide. This report could offer some hints about the BoJ’s next policy decision on January 24. 

Meanwhile, the verbal intervention by the Japanese authorities might help limit the JPY’s losses. Japan's Finance Minister Katsunobu Kato noted on Friday that the official will take suitable measures against excessive foreign exchange movements.