Some heavy flows in Asia kicked down the pair with the yen gaining across the board but we are seeing USD/JPY sellers pull short of firmly contesting the 135.00 mark. In the big picture, we've been somewhat caught around the range of 135.00 to 140.00 since the start of the month and as much as the yen move today is notable, it is still keeping within that region.
Now, the Fed yesterday saw a subtle shift in communication but all in all, I don't see them turning tail on more aggressive rate hikes i.e. anything more than 25 bps until September at the very least. But as Powell noted, it is all going to come down to the data and so markets will have to fill in the blanks with those as well as having to digest commentary from Fed speakers.
The interesting development on the day is that Treasury yields are pulling higher and that could spill over to USD/JPY as well - also pushing the pair higher. That could see the early losses today pare back somewhat but until there is conviction to push for a break on either side of 135.00 and 140.00, the "consolidation" at the top is keeping buyers poised still.
