USD/JPY is consolidating at new highs.

The Japanese yen, paired with the US dollar, has momentarily halted its devaluation. The current USD/JPY exchange rate stands at 146.47.

The US dollar's robust position on the global stage, fueled by the Federal Reserve's inclination towards further interest rate hikes, continues to put pressure on the JPY. In contrast to the Fed's approach, the Bank of Japan maintains a conservative stance, keeping its interest rate in negative territory. The yen's persistent decline is largely attributed to this interest rate differential.

Today, it was announced that the Japanese government is contemplating a comprehensive economic stimulus package to be rolled out in September. This package includes previously announced subsidies for fuel and a range of essential goods.

While this move could potentially be pro-inflationary, the lack of detailed information makes it challenging to analyze at this point.

Should key US economic data, slated for release later this week, leave room for the Federal Reserve to consider further interest rate hikes, the yen may resume its decline.

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