Key events today:

08.05 12:30 UTC: USD – Unemployment Rate.

The pair is holding near 156.85–157.00 following recent sharp fluctuations tied to intervention risks. Japanese authorities continue to warn the market of their readiness to act against excessive Yen weakness, which limits the pair’s upside. However, the fact that USD/JPY has returned to the 157.00 area shows that fundamental demand for the Dollar remains intact.

The primary issue for the Yen is the divergence in monetary policy between the US and Japan. Even as potential tightening by the Bank of Japan is discussed, the market doubts the regulator can quickly shift the balance of power without a parallel decline in US yields. Additional pressure on the Japanese currency comes from rising energy prices, as this worsens import conditions for Japan.

The risk of further action by Japanese authorities remains the main constraint for buying USD/JPY; therefore, the trade requires caution. Nevertheless, the Dollar receives support from tensions surrounding Iran and anticipation of US labor market data. As long as the pair holds at 156.85, the fundamental picture allows for continued growth toward higher levels.

Recommendations: BUY 156.85, SL 156.55, TP 157.80.