• The Japanese Yen attracts some follow-through buying amid intervention fears.
• Bulls seem unaffected by data showing that Japan’s economy contracted in Q4.
• Delayed Fed rate cut bets favour the USD bulls and could lend support to USD/JPY.

The Japanese Yen (JPY) ticks higher against its American counterpart for the second successive day on Thursday, albeit lacks follow-through and remains well within the striking distance of the YTD low touched earlier this week. Japanese officials warned against rapid and speculative moves in the FX market, fueling speculations about a possible intervention to defend the domestic currency. This, in turn, is seen as a key factor lending some support to the JPY. That said, provisional government data showed that Japan’s economy unexpectedly contracted again during the fourth quarter, confirming a technical recession and raising uncertainty about the likely timing of when the Bank of Japan (BoJ) will exit the negative interest rates policy.

This, along with signs of stability in the equity markets, keeps a lid on any meaningful appreciating move for the JPY. The US Dollar (USD), on the other hand, might continue to draw support from growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer. The bets were further reaffirmed by hotter-than-expected US consumer inflation figures released on Tuesday, which comes on top of the upbeat data suggesting that the economy is in good shape. The hawkish outlook, meanwhile, favours the USD bulls and should further contribute to capping the upside for the USD/JPY pair. Traders now look to the US economic docket, highlighting monthly Retail Sales figures, for short-term opportunities