Key events today:

14:00 UTC: USD – University of Michigan Consumer Sentiment Index.

18:30 UTC: USD – FOMC member Raphael Bostic will speak.

19:30 UTC: USD – FOMC member Mary Daly will speak.

The Japanese yen (JPY) fluctuates in a narrow trading range against its American counterpart during the Asian session on Friday and consolidates significant losses this week to the lowest level since 1990. The Bank of Japan (BoJ) has given few signals about when it will further raise interest rates, while markets are now betting that the Federal Reserve (Fed) will not cut interest rates at least until the September meeting. This suggests that the significant interest rate differential between the US and Japan will persist for some time, which, along with steady dynamics in the stock markets, continues to undermine the safe-haven yen.

On the other hand, the US dollar remains near the peak since the beginning of the year amid expectations that the Fed will raise rates longer due to still unstable inflation. This becomes another factor supporting the USD/JPY pair, although bulls seem reluctant to make aggressive bets in light of recent verbal warnings from Japanese officials that they will intervene in the market situation to stop further weakening of the yen. Nevertheless, the fundamental backdrop suggests that the path of least resistance for the currency pair is upward, and any significant corrective decline is likely to be seen as a buying opportunity.

Recommendations: Trade predominantly with buy orders from the current price level.