Important events today:

12:30 UTC: USD – Building Permits.

The Japanese yen (JPY) bounced back against the US dollar (USD) on Friday, possibly due to Japan’s recent GDP growth in the second quarter, which supports the possibility of a rate hike by the Bank of Japan (BoJ) in the near future.

However, the yen may face challenges due to political uncertainty in Japan, driven by reports that Prime Minister Fumio Kishida will not seek re-election as party leader in September, effectively ending his term as Prime Minister.

The USD/JPY pair is declining as the US dollar loses ground amid falling Treasury yields. Additionally, traders are fully pricing in the likelihood of a 25 basis point rate cut by the US Federal Reserve in September, according to the CME FedWatch tool.

However, the dollar has received support as recent US economic data was better than expected, easing market fears of a US recession. Later in the North American session, preliminary data on the Michigan consumer sentiment index for August and building permits for July will be released.

Recommendations: Trade mainly with Sell orders from the current price level.