On Tuesday, the USD/JPY pair is looking to consolidate around the 157 level after plunging to 155.2 the day before on fears of possible Japanese government intervention.
The yen remains under pressure on expectations that the wide interest rate differential between the Bank of Japan and the Federal Reserve will continue for some time. In addition, easing geopolitical tensions in the Middle East are also weighing on the safe-haven yen.
"Of course, the still wide interest rate differential between the Fed and the Bank of Japan may continue to keep the USD/JPY pair afloat," said Wei Liang Chang of DBS.
At the time of writing, the USD/JPY is trading at 156.92, up 0.37% over the past 24 hours.
At the same time, traders are cautious as they wait for more signals on the Federal Reserve's rate cut path before opening new directional bets, FX Street reported.
However, Japan's top currency diplomat, Masato Kanda, did not confirm the Bank of Japan's intervention in the forex market but said that the current developments in the market are "speculative, rapid, and abnormal."
The Bank of Japan decided to keep its key interest rate unchanged at its latest meeting and said it would continue to buy government bonds in line with recommendations made in March.
Data released from Japan on Tuesday showed that the unemployment rate held steady at 2.6% in March, beating expectations by 0.1%. Meanwhile, industrial production rose 3.8% in the period, and retail sales fell 1.2%.
Looking ahead, the markets will focus on US data, including the Chicago PMI and the Conference Board Consumer Confidence, which may influence the FOMC's monetary policy decision expected on Wednesday.
The EUR/JPY and GBP/JPY were up 0.15% and 0.10% to 167.84 and 196.61, respectively.
Meanwhile, the AUD/JPY and NZD/JPY were down 0.32%.
The Australian dollar is losing ground after the release of retail sales data, which failed to meet expectations.
Further reading: Gold trades in a narrow range, awaiting Fed's decision