USD/JPY hovers above 154.50 close to its peak since June 1990

• USD/JPY maintains its position around the high of 154.78 marked on Tuesday.
• US Dollar strengthens on expectations of the Fed prolonging higher policy rates for a longer duration.
• Japan's Merchandise Trade Balance Total rose to a surplus of ¥366.5 billion in March, from the previous deficit of ¥377.8 billion.

USD/JPY trades around 154.60 during the early European session on Wednesday, hovering near its peak at 154.78, a level not seen since June 1990. The downward correction in the US Dollar (USD) puts pressure on the USD/JPY pair. However, expectations of the Federal Reserve (Fed) maintaining elevated interest rates for a longer duration, buoyed by a robust US economy and persistent inflation, counterbalance the downward trend in the USD/JPY pair.

Federal Reserve Chair Jerome Powell's remarks on Tuesday at the Washington Forum might have bolstered the greenback. Powell noted that recent data indicates limited progress on inflation this year, suggesting a prolonged period before reaching the 2% target. This commentary possibly contributed to a more hawkish stance and provided support to the US Dollar, as reported by Reuters.

On the other side, the Japanese Yen (JPY) might have found support from the country's trade balance swinging to a surplus in March. The Merchandise Trade Balance Total improved to ¥366.5 billion from the previous deficit of ¥377.8 billion. Additionally, a private survey revealed that sentiment among manufacturers in Japan softened in April due to a weaker Yen driving up import expenses.

Furthermore, the Japanese Yen could see bolstering from safe-haven inflows, likely prompted by risk aversion. Investors are cautiously monitoring Israel's response to Iran's air strike on Saturday. A Reuters report mentioned the postponement of a third meeting of Israel's war cabinet, initially scheduled for Tuesday, to Wednesday, to deliberate on a reaction to Iran's unprecedented direct attack.

Traders eagerly await the release of Japan's National Consumer Price Index (CPI) data by the Statistics Bureau of Japan on Friday. Market expectations point towards a moderation in Consumer Prices in March.