• USD/JPY remains under some selling pressure for the fifth straight day on Wednesday.
• Speculations that the BoJ will change its policy stance in July continues to boost the JPY.
• The prevailing USD selling bias contributes to the ongoing slide to a nearly one-month low.

The USD/JPY pair prolongs its recent sharp retracement slide from the YTD peak - levels just above the 145.00 psychological mark = and continues losing ground for the fifth successive day on Wednesday. Spot prices drop to a nearly one-month low during the Asian session and currently trade  just above the 139.50 level, down nearly 0.50% for the day.

The Japanese Yen (JPY) continues to draw support from speculations that the Bank of Japan (BOJ) will adjust its ultra-loose policy settings as soon as this month, which has been pushing the Japanese Government Bond (JGB) yields higher. In fact, the benchmark 10-year JGB yield shot to its highest level since April earlier this week. This, along with the recent pullback in the US Treasury bond yields, narrows the US-Japan rate-differential and further contributes to driving flows towards the JPY. Apart from this, the prevailing US Dollar (USD) selling bias is seen as another factor exerting downward pressure on the USD/JPY pair.

In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, hits a fresh two-month low in the wake of firming expectations that the Federal Reserve (Fed) has limited headroom to keep raising rates. Several Fed officials said on Monday the US central bank would likely tighten its monetary policy further to bring down inflation, though the end to its current rate-hiking cycle was getting close. The bets were reaffirmed by the New York Fed's monthly survey released on Monday, which showed that the one-year consumer inflation expectation dropped to 3.8% in June - the lowest level since April 2021.

The aforementioned fundamental backdrop, meanwhile, suggests that the path of least resistance for the USD/JPY pair remains to the downside. Traders, however, might refrain from placing aggressive and prefer to wait on the sidelines ahead of the release of the latest US consumer inflation figures, due later during the early North American session. A furtehr slowdown in price growth is more likely to prompt fresh USD selling, paving the way for a further near-term deprecaiting move for the major. In contrast, any positive surprise might prompt aggressive short-covering move around the Greenback and the major