Key events today:

05:30 UTC: JPY – Industrial Production Change

15:00 UTC: USD – University of Michigan Consumer Sentiment Index

The Japanese yen (JPY) rose to a one-week high against the US dollar during Friday’s Asian session, driven by several factors. The ongoing escalation of geopolitical tensions in the Middle East negatively affects investor sentiment and increases demand for traditional safe-haven assets, including the yen.

In addition, growing acknowledgment that the Bank of Japan (BoJ) will continue its path toward monetary policy normalization supports the relative strength of the JPY.

However, a modest rebound in the US dollar (USD) from its lowest level since March 2022 has helped the USD/JPY pair trim significant daily losses, bringing it to the 142.80–142.75 range. Still, a meaningful USD recovery appears unlikely, as signs of slowing inflation and potential labor market weakness have fueled expectations of a Fed rate cut in September.

This diverges sharply from Japan’s policy outlook and should continue to benefit the low-yielding yen while limiting any recovery attempts by USD/JPY.

Recommendation: SELL 143.50, SL 143.70, TP 142.60.