Ella 
The yen weakened against the dollar at the start of the week and retreated further from a more than two-week high hit on Friday. The Bank of Japan’s dovish rhetoric, signals that the next rate hike will take time, and a positive risk tone continue to undermine risk aversion in the yen. On top of that, weak domestic data showed real wages fell for a 23rd consecutive month in February, dragging the yen lower for a second day in a row.
On the other hand, the dollar was still supported by upbeat U.S. non-farm payrolls data, which suggested the Federal Reserve may delay cutting interest rates. In addition, the weakening of the Federal Reserve’s bets on cutting interest rates three times in 2024 still supports high U.S. bond yields, causing the interest rate gap between the United States and Japan to widen, further suppressing the Japanese yen, and helping the USD/JPY continue its rebound from last Friday’s more than two-week low. and is back near multi-decade highs.
Still, Japanese authorities have recently signaled a willingness to intervene in markets to support the currency, which could discourage aggressive bets by yen bears. In addition, investors may prefer to stay on the sidelines ahead of key data such as the latest U.S. consumer inflation data and U.S. Federal Open Market Committee (FOMC) meeting minutes released on Wednesday. In turn, some caution is warranted before preparing for a resumption of the uptrend seen over the past four weeks or so.
