Japanese Yen trims part of intraday gains vs retreating USD as traders await US PCE data

The USD/JPY exchange rate experienced a slight recovery from a low point earlier in the week, trading near the 157.00 mark during the first half of the European session. Day trading activity showed a 0.25% decline. Japanese authorities have been aggressively intervening to support the domestic currency, which has put downward pressure on the USD/JPY pair.

Japanese Finance Minister Satsuki Katayama and Atsushi Mimura, the top currency diplomat, have warned the markets to take the US-Japan messaging on currency depreciation seriously. The US Treasury Secretary Scott Bessent confirmed discussions with Katayama on the benefits of a strong Yen. President Donald Trump expressed concerns over the Yen's depreciation to Japan's Prime Minister Sanae Takaichi during a UN General Assembly meeting, further fueling speculation of a potential US-Japan joint intervention.

Minutes from the Bank of Japan's (BoJ) July monetary policy meeting revealed policymakers debating the need for faster interest rate hikes due to mounting inflation concerns. This increased the likelihood of another BoJ rate hike in October or December, bolstering the Yen. Meanwhile, a slight weakness in the US Dollar contributed to the bearish sentiment for the USD/JPY pair.

The release of the US Personal Consumption Expenditures (PCE) Price Index and the final US Q2 GDP print tomorrow will likely limit further downside for the USD/JPY pair.