The USD/JPY pair has been declining for the second consecutive day. Against the backdrop of declining U.S. Treasury yields, dollar bulls decided to take some profits off the table after the recent rally.

However, amid expectations that the Federal Reserve will continue to maintain interest rates at a higher level for a longer period of time and the likelihood of another rate hike at the June FOMC meeting, the decline in the U.S. dollar remains subdued.

According to a statement by Bank of Japan Governor Kazuo Ueda, the central bank will continue its yield curve control measures. The Tokyo Consumer Price Index data released last Friday showed that inflation in the capital city of Japan decreased more than expected in May. Accordingly, the Bank of Japan's forecast that inflation in the country will fall below the 2% target level by the middle of the current fiscal year has been confirmed by fundamental indicators. This will allow the central bank to maintain its "dovish" stance.

Furthermore, the announcement by U.S. lawmakers of a preliminary agreement to suspend the U.S. government's debt ceiling at $31.4 trillion increases investor confidence. Evidence of this is the optimistic sentiment in the stock markets and the capital outflow from traditional safe-haven assets, including the JPY.

Such a fundamental background suggests that the path of least resistance for the USD/JPY pair is upward. Therefore, any pullback can be seen as an opportunity to buy.