Anna 
The Japanese Yen (JPY) has seen a modest recovery from its recent one-week low against the US Dollar (USD) on Friday, trading near the daily peak as the European session approaches. This recovery comes after Japan’s largest companies responded positively to the Union’s wage hike demands, reinforcing market expectations for an imminent shift in the Bank of Japan’s (BoJ) policy stance. The JPY, considered a safe-haven currency, has benefited from a softer risk tone in the market.
BoJ Governor Kazuo Ueda’s recent assessment of the economy has contributed to the JPY’s recovery. Ueda’s comments earlier in the week hinted at a slightly bleaker economic outlook and dampened hopes for a rate hike at the upcoming March 18-19 meeting. Additionally, a modest uptick in the US Dollar (USD), fueled by expectations that the Federal Reserve (Fed) will maintain its higher-for-longer interest rates narrative to combat inflation, has helped limit the downside for the USD/JPY pair.
Traders are showing reluctance ahead of next week’s central bank events, with the BoJ announcing its policy decision on Tuesday, followed by the outcome of the two-day Federal Open Market Committee (FOMC) meeting on Wednesday. These events will play a crucial role in determining the near-term trajectory for the USD/JPY pair.
In the meantime, traders on Friday will monitor the US economic docket for short-term opportunities, including the Empire State Manufacturing Index, Industrial Production figures, and the Preliminary Michigan Consumer Sentiment Index.
Despite the recent recovery in the JPY, spot prices remain on track to register strong weekly gains, potentially breaking a two-week losing streak.
