• USD/JPY corrects to around 156.20 after two consecutive days of gains.
• The resilience of the US labor market supports the US Dollar but caps the potential for a rebound.
• Bank of Japan officials keep the door open to further rate hikes.

USD/JPY trades around 156.20 on Thursday at the time of writing, down 0.15% on the day, slightly correcting after two consecutive days of gains. The pullback remains limited, as the US Dollar (USD) retains some support from solid US data, while the Japanese Yen (JPY) benefits from relatively hawkish comments from Tokyo.

In the United States (US), the latest weekly labor market figures showed some resilience. Initial Jobless Claims come in at 212K, below expectations of 215K and slightly above the previous reading of 208K. Continuing Claims also declined to 1.833 million, signaling stabilization in labor market conditions. These elements reinforce the view that the Federal Reserve (Fed) can afford to adopt a patient approach before considering further monetary easing.

The minutes of the January Federal Open Market Committee (FOMC) meeting showed that several members consider it appropriate to keep interest rates unchanged for some time, while leaving the door open to adjustments if inflation fails to move sustainably toward the 2% target. According to the CME FedWatch tool, markets widely expect a pause at the March and April meetings, while the chance of a 25-basis-point cut in June has declined in recent days.

On the Japanese side, recent comments from Bank of Japan (BoJ) officials sustain expectations of a gradual policy normalization. Governor Kazuo Ueda indicated that the central bank will carefully assess incoming data at the March and April meetings to evaluate the possibility of raising rates later this year. Meanwhile, board member Hajime Takata, known for his hawkish stance, calls for a further “gear shift”, arguing that the price stability target is nearly achieved.

Although markets remain cautious about the exact timing of the next hike, these signals help stabilize the Japanese Yen after the pressure seen earlier this week. Traders are now closely monitoring rate expectations on both sides of the Pacific, as the yield differential between the United States and Japan remains a key driver for USD/JPY.