Important events today:

07.08 12:30 UTC: USD – Nonfarm Payrolls.

The yen retains support following joint actions by Japan and the US in the foreign exchange market on July 31. The officially confirmed purchase of the Japanese currency demonstrated the readiness of authorities to counter excessive exchange rate fluctuations, which limits the upside potential of USD-JPY. However, the effect of the intervention is weakening as the market once again factors in the significant interest rate differential.

The Bank of Japan maintains its short-term rate near 1.0 percent, while the Fed rate target range stands at 3.50 to 3.75 percent. Yields on ten-year US Treasury notes remain around 4.68 percent, supporting the dollar’s attractiveness in carry trades. Current Bank of Japan policy has not yet closed the gap with the US, and no new confirmed actions by authorities have followed the intervention.

The key test will be the US employment report. Results meeting or exceeding expectations could support yields and continue the dollar’s recovery against the yen. The risk of repeated intervention warrants a cautious target, but does not in itself negate the advantage of the interest rate factor. Provided the current backdrop remains unchanged, the baseline scenario allows for a moderate rise in USD-JPY, whereas weak US data will strengthen demand for the yen.

Recommendations: BUY 158.30, SL 157.90, TP 159.20.