Japanese Yen bears turn cautious amid intervention fears; USD/JPY hovers around 157.00

• The Japanese Yen struggles to lure buyers and languishes around a multi-month trough. 
• The BoJ’s dovish stance and a positive risk tone seem to undermine the safe-haven JPY.
• The Fed’s hawkish outlook for 2025 acts as a tailwind for the buck and the USD/JPY pair.

The Japanese Yen (JPY) stalls the previous day’s decline against its American counterpart, though it lacks bullish conviction and remains close to a multi-month low touched last week. The Bank of Japan’s (BoJ) cautious stance on further interest rate hikes, along with the Federal Reserve’s (Fed) hawkish shift, dampens hopes for a sharp narrowing in the US-Japan rate differential. This, along with a generally positive risk tone, continues to act as a headwind for the JPY. 

Meanwhile, a potential BoJ rate hike in January or March remains on the table on the back of the recent strong inflation data from Japan. Moreover, persistent geopolitical risks stemming from the protracted Russia-Ukraine war and tensions in the Middle East, along with trade war fears, lend some support to the safe-haven JPY. Apart from this, subdued US Dollar (USD) price action caps the upside for the USD/JPY pair amid fears of a possible intervention by Japanese authorities.