USD/JPY holds positive ground above 158.00 amid Japan's political concerns

• USD/JPY strengthens to around 158.10 in Tuesday’s early Asian session. 

• Reports that Japan's Prime Minister may call an early general election weigh on the Japanese Yen. 

• Fed’s Powell accused the government of using the legal system against the US central bank. 

The USD/JPY pair trades in positive territory near 158.10 during the early Asian session on Tuesday. The Japanese Yen (JPY) softens against the US Dollar (USD) amid political concerns in Japan. Traders will closely monitor the release of the US Consumer Price Index (CPI) inflation data for December, which is due later on Tuesday. 

Reuters reported on Sunday that Japan’s Prime Minister Sanae Takaichi may call an early general election, and it could be held as early as February. This would be the first time for the conservative Takaichi to face the voters, giving her an opportunity to capitalize on the strong public approval ratings she has enjoyed since taking office in October. Concerns about political uncertainty in Japan might undermine the JPY and create a tailwind for the pair in the near term. 

On the other hand, renewed questions about the Federal Reserve (Fed) independence could drag the Greenback lower. Fed Chair Jerome Powell said that the administration had threatened him with a criminal indictment related to the central bank headquarters renovation. Powell called the threats a "pretext" aimed at putting pressure on the Fed to cut interest rates. Fitch Ratings said on Monday it views the US central bank's independence as a key supporting factor for its AA+ ‌U.S. sovereign rating.

"This open warfare between the Fed and the U.S. administration ... it's clearly not a good look for the U.S. dollar," said Ray Attrill, National Australia Bank's head of currency strategy.