Japanese Yen consolidates vs recovering USD as intervention risks help limit losses

The USD/JPY exchange rate struggles to build on its previous day's uptick, steadying just below the 158.00 level during the Asian trading session on Tuesday. Traders remain vigilant as Japan's Finance Minister Satsuki Katayama issued a fresh warning on Monday about potential government intervention to curb excessive weakening in the Yen.

However, uncertainty surrounding the Bank of Japan's upcoming interest rate decision adds pressure to the Yen and provides some respite for the US Dollar. Positive signs from the Institute for Supply Management's Manufacturing PMI report, which showed continuous expansion for the tenth month, bolster the USD. Meanwhile, hawkish expectations from the US Federal Reserve further strengthens the Dollar.

Expectations of a diplomatic resolution to the US-Iran conflict also contribute to the Dollar's strength. However, uncertainty surrounding the US midterm elections introduces volatility into the market. Political risks and the potential for a break below the 157.00 level could shift the trading range into a more bearish orientation.