Anna 
The Japanese Yen (JPY) exhibited a sharp strengthening against the US Dollar (USD) on Thursday, reaching a two-week high, following the Bank of Japan (BoJ) board member Hajime Takata’s hawkish remarks. Takata hinted at an impending rate hike, fueling initial market enthusiasm. However, the optimism waned swiftly after BoJ Governor Kazuo Ueda expressed that the 2% inflation target is not yet in sight, and a recession in Japan may necessitate a delay in tightening monetary policy. Despite these concerns and a risk-on environment, the safe-haven JPY faced renewed selling pressure, assisting the USD/JPY pair to find support around the 149.20 region.
In contrast, signs of easing inflation in the US contribute to expectations of rate cuts by the Federal Reserve (Fed) later in the year. However, investors appear convinced that the US central bank will defer such measures until the June policy meeting. The hawkish outlook, coupled with elevated US Treasury bond yields, acts as a tailwind for the USD, pushing the USD/JPY pair closer to the mid-150.00s on Friday. However, speculation regarding potential Japanese interventions to curb further JPY weakness could limit upside potential.
Traders are turning their attention to key US macro data, including the ISM Manufacturing PMI and the revised Michigan Consumer Sentiment Index, for potential market-moving events during the North American session. Additionally, speeches by influential Federal Open Market Committee (FOMC) members and movements in US bond yields will play a pivotal role in shaping USD demand. The broader risk sentiment will also contribute to short-term trading opportunities around the USD/JPY pair on the final day of the week.
