USD/JPY was seen consolidating its recent strong gains to the highest level since February 2020
The USD/JPY pair held steady near multi-month tops through the early European session, with bulls looking to build on the momentum further beyond the 112.00 round-figure mark. The pair was seen oscillating in range through the first half of the trading action on Thursday and consolidated its recent strong gains recorded over the past six trading sessions. The US dollar eased a bit from the highest level since November 2020 touched in the previous day, which, in turn, was seen as a key factor that acted as a headwind for the USD/JPY pair. However, the risk-on impulse in the markets dented demand for the safe-haven Japanese yen and extended some support to the major.
Moreover, a modest USD pullback is more likely to remain limited amid expectations that the Fed will begin rolling back its massive pandemic-era stimulus as soon as November. The markets also seem to have started pricing in the possibility of a Fed rate hike in 2022. This, to a larger extent, helped offset the looming US debt ceiling and continued underpinning the greenback. It is worth mentioning that the federal funding is due to expire on Thursday and borrowing authority on around October 18.