Anna 
The Japanese Yen (JPY) faced broad-based weakness as Bank of Japan (BoJ) Deputy Governor Uchida Shinichi made dovish remarks on Thursday. Uchida mentioned that the central bank will not adopt an aggressive stance on hiking interest rates once negative rates are concluded. This dovish sentiment, coupled with a generally positive tone in equity markets, led to a decline in the safe-haven appeal of the JPY, pushing the USD/JPY pair towards the 148.80 level during the early European session.
Despite the current weakening of the JPY, traders may remain cautious in placing aggressive directional bets. Investors are optimistic about potential wage growth in Japan for the current year, expecting it to surpass the levels seen in 2023. This optimism raises speculation that the Bank of Japan could eventually exit its long-standing ultra-loose monetary policy. Additionally, geopolitical tensions continue to pose a significant risk to the markets, potentially acting as a supportive factor for the JPY.
On the other hand, the US Dollar (USD) is trading below recent highs, as uncertainties linger regarding the timing and pace of interest rate cuts by the Federal Reserve (Fed) in 2024. This uncertainty may contribute to limiting further gains for the USD/JPY pair in the near term.
