• The Japanese Yen draws support from fears about a possible government intervention. 
• The BoJ rate-hike uncertainty and the risk-on environment should cap the safe-haven JPY.
• A bullish USD might further act as a tailwind for USD/JPY ahead of the key FOMC decision.

The Japanese Yen (JPY) struggles to register any meaningful recovery against its American counterpart and languishes near the lowest level since July 30. The uncertainty over the Bank of Japan's (BoJ) ability to hike interest rates further, along with the prevalent risk-on environment, continues to undermine the safe-haven JPY. Adding to this, elevated US Treasury bond yields, bolstered by Republican Donald Trump’s comeback as the 47th President of the United States (US), turns out to be another factor acting as a headwind for the lower-yielding JPY.

Meanwhile, the overnight slump prompted verbal intervention from Japanese authorities, which could offer some support to the JPY and help limit losses. The US Dollar (USD), on the other hand, held steady just below a four-month top touched on Wednesday amid optimism about higher growth and inflation, which could restrict the Federal Reserve’s (Fed) ability to cut interest rates. This could further act as a tailwind for the USD/JPY pair ahead of the highly anticipated Federal Open Market Committee (FOMC) policy decision later this Thursday.

Daily Digest Market Movers: Japanese Yen seems vulnerable despite some verbal intervention from authorities

Japan's Chief Cabinet Secretary, Yoshimasa Hayashi, reiterated on Wednesday that the government intended to closely watch moves in the FX market, including speculative moves, with a higher sense of urgency.
Adding to this, Atsushi Mimura, Japan’s Vice Finance Minister for International Affairs and top foreign exchange official, said on Thursday that the government is ready to take appropriate actions against excess FX moves if necessary.
The minutes of the September Bank of Japan meeting showed that the central bank plans gradual policy rate increases, though it remains cautious about overseas economic uncertainties, especially from the US.
Investors, however, seem convinced that the political uncertainty in Japan could make it difficult for the BoJ to tighten monetary policy further, which, along with the risk-on mood, undermines the Japanese Yen. 
The US Dollar recorded its biggest one-day gain since September 2022, touching the highest level since July amid hopes that Donald Trump's policies would push up inflation and reduce the pace of interest rate cuts.
Furthermore, the return of the so-called Trump trade triggered a sell-off in the US fixed-income market, pushing the yield on the benchmark 10-year US government bond to 4.45%, or its highest level since July.
This resulted in the further widening of the US-Japan rate differential, which might continue to weigh on the lower-yielding JPY and suggests that the path of least resistance for the USD/JPY pair is to the upside.