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Throughout the Asian session on Wednesday, the USD/JPY pair struggles to obtain traction and oscillates in a narrow trading band just above the mid-141.00s. Spot prices, however, remain above the 100-hour Simple Moving Average (SMA) and, for the time being, appear to have halted yesterday's retreat from the greatest level since November 2022.

A more dovish stance adopted by the Bank of Japan (BoJ) continues to weigh on the Japanese Yen (JPY), which functions as a tailwind for the USD/JPY pair. In fact, the minutes from the April meeting of the Bank of Japan revealed that a number of participants felt it was appropriate for the central bank to continue the current monetary easing. The minutes also revealed that Japanese Prime Minister (PM) Fumio Kishida and Bank of Japan (BoJ) Governor Kazuo Ueda concurred there was no need to change the government-BoJ joint statement at this time.

Aside from this, a modest increase in the US Dollar (USD) is another factor supporting the USD/JPY pair. The Federal Reserve's (Fed) hawkish outlook, indicating that borrowing costs may still need to increase by up to 50 basis points and predicting a higher peak interest rate this year, continues to support the dollar's mild bid tone. In spite of expectations that the US central bank is approaching the end of its rate-hiking cycle, USD bulls appear reluctant to place aggressive wagers ahead of Fed Chair Jerome Powell's testimony.

Consequently, Powell's remarks will be closely analysed for hints about the Fed's future rate-hike course, which, along with speeches by a multitude of FOMC members, will have a significant impact on the USD price dynamics. This, in turn, should help investors determine the USD/JPY pair's near-term trajectory. Notwithstanding, the aforementioned fundamental environment suggests that the path of least resistance for spot prices is to the upside, and any significant corrective decline may still be viewed as a buying opportunity.

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