One reason should be Japan's Finance Minister Shunichi Suzuki statement that exchange rates should steadily move in line with indicators. He said the government must remain ready to take necessary measures against volatility. However, he refrained from disclosing whether they intervened in the market to support yen (JPY), just like Japan's Chief Currency Diplomat Masato Kanda.

Earlier, Kanda said that in his meeting with Prime Minister Fumio Kishida, they discussed the economy as a whole, and any intervention in the market would be strictly aimed at volatility, not yen's level. However, market participants remain skeptical that the government will intervene in the forex market to combat the sustained depreciation of yen. This could benefit yen's status as a safe haven and deter traders from taking new bullish positions in USD/JPY, but a strong US dollar may continue to act as a headwind.

The US dollar index, which tracks dollar's performance against a basket of currencies, currently approaches the 11-month high, supported by the Fed's hawkish outlook. Market players seems to be convinced that the central bank will continue to tighten monetary policy, as recent comments from several Fed officials mentioned potential 25 basis point rate hike by the end of the current year. In addition, the monthly JOLTS report published on Tuesday showed that approximately 9.61 million job vacancies became available in August, a significant increase compared to the revised July figure of 8.92 million. This means that the labor market remains tight, while inflation continues to be present.

Of course, sustained and high inflation will prompt the Fed to maintain high rates for as long as possible, extending the rate hike cycle until 2024. This pushes the yield on 10-year government bonds to a new 16-year high, thereby strengthening dollar.

Further increases in US bond yields also lead to an increase in the interest rate differential between the US and Japan, which should contribute to an outflow of funds from JPY, assuming that the path of least resistance for the pair could be upwards. However, the Japanese government will not be idle, probably adjusting the market to achieve its goals.

Therefore, traders should refrain from aggressive bets for now and wait for the release of macroeconomic data from the US, including the ADP report and Service PMI from the ISM. A new impulse may be possible.