USD/JPY bounces off daily low, finds support near 148.00 amid bullish USD

• USD/JPY corrects from a nearly two-month peak amid renewed intervention fears.
• A turnaround in the risk sentiment further benefits the JPY and weighs on the pair.
• Reduced bets for a 50 bps Fed rate cut next month should limit losses for the major.

The USD/JPY pair retreats after touching its highest level since August 16, around the 149.10-149.15 area and extends the steady intraday descent through the first half of the European session on Monday. Spot prices, for now, seem to have snapped a three-day winning streak and drop to the 148.00 mark, or a fresh daily low in the last hour. albeit recover a few pips thereafter. 

The Japanese Yen (JPY) strengthens across the board after comments from Japan's Finance Ministry's Vice Finance Minister for International Affairs Atsushi Mimura fueled speculations about a possible intervention. Apart from this, a turnaround in the global risk sentiment, along with escalating geopolitical tensions in the Middle East, drives some haven flows towards the JPY and exerts some downward pressure on the USD/JPY pair. The fundamental backdrop, however, warrants some caution for bearish traders and positioning for any further depreciating move.

Japan's new Prime Minister Shigeru Ishiba last week said that the country is not ready for further rate hikes. Adding to this, the Bank of Japan (BoJ) board member offered a similar view last Thursday and raised uncertainty about future rate hikes. This, in turn, might cap the JPY. The US Dollar (USD), on the other hand, remains supported near a seven-week high touched in the reaction to the upbeat US jobs report on Friday, which forced investors to further pare bets for another oversized rate cut by the Federal Reserve (Fed). This could further lend support to the USD/JPY pair. 

Traders might also prefer to move to the sidelines ahead of this week's release of the FOMC meeting minutes on Wednesday. Apart from this, the US inflation figures - the Consumer Price Index (CPI) and the Producer Price Index (PPI) on Thursday and Friday, respectively - will be looked upon for cues about the Fed's rate-cut path. This, in turn, will play a key role in influencing the near-term USD price dynamics and provide a fresh impetus to the USD/JPY pair. In the meantime, Fedspeak will be looked upon for short-term opportunities in the absence of any relevant data on Monday.