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In the early Asian session, the USD/JPY pair has progressively retraced toward the key support level of 132.00. After a massive surge to around 132.70, the asset is seeing weak selling pressure. Despite the risk-on market sentiment, the major may resume its uptrend as the Bank of Japan (BOJ) has backed additional policy easing to boost wages.

S&P500 demonstrated a stronger rebound on Wednesday following a two-day decline as the Federal Reserve (Fed) is expected to slow the rate of interest rate hikes.

The US Dollar Index (DXY) fell significantly below 104.00 as an adjustment to the Fed's slow pace of policy tightening foreshadowed a decline in the US price index for goods and services. In addition, the majority of Fed policymakers' support for a slower rate of rate hikes has pushed on the yield on US Treasury bonds. Yields on 10-year US Treasuries have decreased to about 3.69 percent.

Investors will monitor the publication of the United States Automatic Data Processing (ADP) Employment Change (Dec), which is anticipated to be higher at 150K than the previous release of 127K. In contrast, the US Nonfarm Payrolls (NFP) indicates an increase of 200K jobs compared to the previous announcement of 263K. The US Institute of Supply Management's (ISM) announcement of a drop in the number of manufacturing activity and the Federal Reserve's decision to raise interest rates boost forecasts of a slowdown in the employment creation process.

On the Tokyo front, the Japanese yen had a sharp decline after BOJ Governor Haruhiko Kuroda argued for additional policy easing to drive the wage price index in order to reach higher inflation projections for CY2023 and CY2024.

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