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  • The prevalent risk-on mood continues to weigh on the JPY and helped regain some traction.
  • Fed rate cuts bets held the US bond yields depressed near multi-year lows and might cap gains.
  • A subdued USD price action does little to influence ahead of the closely watched US jobs data.

The USD/JPY pair ticked higher on the last trading day of the week and has now moved within the striking distance of reclaiming the 108.00 round figure mark.  

Having spent the previous session in a tight range amid relatively thin liquidity conditions on the back of the Independence Day holiday in the US, the pair managed to regain some positive traction on Friday and was seen supported by fading safe-haven demand.

Expectations of further monetary easing by major central banks continued boosting investors’ appetite for riskier assets. The same was evident from the prevalent risk-on mood around equity markets, which eventually undermined the Japanese Yen’s relative safe-haven demand.

However, investors remained convinced that the Fed will move towards cutting interest rates later this July, which kept the US Treasury bond yields depressed near multi-year lows and might turn out to be the only factor keeping a lid on any meaningful up-move for the major.

Meanwhile, the US Dollar held steady and did little to influence the price action. Investors seemed reluctant to place any aggressive USD bets and preferred to stay on the sidelines ahead of Friday’s important release of the closely watched US monthly jobs report – NFP.

The US employment details might play an important role in determining the Fed’s near-term monetary policy outlook, which could result in some volatile price action later during the early North-American session and provide a meaningful directional impetus for the major.

Technical levels to watch