Anna 
During the early part of the European session on Friday, the Japanese Yen (JPY) experienced a decline against its American counterpart, retreating further from a two-week high reached the previous day. The movement is attributed to optimistic sentiments driven by expectations of increased stimulus measures from China and diplomatic efforts aiming for a ceasefire in the Palestinian enclave. These factors have boosted investor confidence and diminished the JPY’s perceived safe-haven status.
Bearish traders are also influenced by a notable rebound in US Treasury bond yields, contributing to the yen’s depreciation. However, a combination of factors is expected to temper any significant downside for the JPY.
Investors appear increasingly convinced that the Bank of Japan (BoJ) is nearing a departure from its ultra-dovish policies in the coming year. In contrast, markets continue to price in a sequence of substantial rate cuts by the Federal Reserve (Fed) in 2024, despite the central bank’s recent pushback against expectations for such moves in March. This situation has kept the US Dollar (USD) subdued, hovering near weekly lows, and is anticipated to limit the upside for the USD/JPY pair.
Traders are exercising caution and refraining from aggressive bets ahead of the release of the US monthly employment details, including the Nonfarm Payrolls (NFP) report scheduled for later today. This cautious approach reflects the market’s anticipation of potential impacts on currency movements based on the employment data.
