Ella 
The Japanese yen (JPY) entered a bullish consolidation phase during Friday’s Asian session, trading within a tight range below the two-and-a-half-week high hit the previous day. Traders now appear reluctant to bet heavily, instead choosing to await the closely watched monthly U.S. non-farm payrolls (NFP) report due later today. Meanwhile, the yen’s downside remains cushioned due to the Bank of Japan’s (BoJ) hawkish bias last week. This, along with the risk of further escalation of geopolitical tensions in the Middle East and China’s economic woes, is likely to continue to support the safe-haven yen.
Meanwhile, investors continue to bet on a series of steep rate cuts this year, despite a less dovish outlook from the Federal Reserve on Wednesday. This has led to the recent decline in U.S. Treasury yields and narrowing interest rate differentials between the U.S. and Japan, further benefiting the Japanese yen. Additionally, expectations of an imminent shift in policy stance from the Federal Reserve have also prompted dollar bulls to scale back their bets, especially after a recent rise to levels not seen since Dec. 13. This, in turn, could hinder any meaningful rebound in USD/JPY ahead of key U.S. data risks. However, the divergence in policy expectations between the Bank of Japan and the Federal Reserve suggests that there will be minimal resistance to downward movement in spot prices.
