Key events today:

12:30 UTC: USD – Change in non-farm employment.

The Japanese yen (JPY) is rising against its American counterpart for the second consecutive day on Friday, jumping to a two-week high during the Asian session. Concerns that the war between Israel and Hamas could spread to Iran and provoke a larger conflict in the Middle East, along with aggressive statements from Federal Reserve officials, are dampening investors’ appetite for risk assets. This has led to an overnight decline in the US stock markets and a flow of funds into the yen.

Meanwhile, investors remain on high alert amid the possibility of Japanese authorities intervening to support the national currency. Furthermore, Bank of Japan Governor Kazuo Ueda signaled the possibility of a rate hike if the movement of the Japanese yen affects inflation and wages, another factor supporting the yen. The US dollar (USD), on the other hand, is trying to benefit from an overnight rebound from a two-week low and contributes to the sentiment around the USD/JPY pair.

However, it remains to be seen whether the yen bulls can develop this momentum or prefer to stay on the sidelines ahead of the release of important monthly US employment data later in the North American session. The popular Non-Farm Payroll (NFP) report will be viewed as a clue regarding the Fed’s interest rate cut path. This, in turn, will play a key role in influencing the near-term price dynamics of the dollar and will determine the next stage of directional movement for the USD/JPY pair.

Recommendations: Trading predominantly with Buy orders from the current price level.