USD/JPY consolidates below 154.00 in a quiet week due to holidays in Japan

• The USD/JPY pair remains near 154.00 despite the weakness of the US Dollar.
• Weak US data puts pressure on the US dollar.
• Speculation of Japanese intervention to support the Japanese yen remains strong.

The USD/JPY pair trades sideways slightly below 154.00 in the American session on Monday. The pair consolidates as trading volume remains thin on Monday's session due to the Children's Day holiday in Japanese markets. Pair Struggles Up Despite Weak US Economic Data, Pulling US Dollar Back

Non-Farm Payrolls and the weak Services PMI have weighed on the US Dollar. The US Dollar Index (DXY), which tracks the dollar against six major currencies, fell slightly below 105.00. The US NFP report released on Friday showed fewer jobs being created and the unemployment rate rising, suggesting consequences of interest rates continuing to be higher by the Fed.

The market sentiment is risky given the firm expectations that the Federal Reserve (Fed) will begin to reduce interest rates from the September meeting. The S&P 500 opens higher, suggesting strong demand for risk-sensitive assets. The 10-year US Treasury yield rises slightly to 4.50%, but has fallen significantly on firm Fed rate cut prospects.

While investors speculate that the Fed will begin to reduce interest rates as of the September meeting. Fed Governor Michelle Bowman stated Friday that she would be willing to raise interest rates further if progress in bringing inflation down to 2% stagnates or reverses.

On the Tokyo front, investors believe that Japan will intervene to revalue the Japanese Yen against the US Dollar. However, Japan's intervention is short-term support and will not bring any fundamental change to the Japanese Yen. Investors want to see evidence that can provide confidence about wage growth.