Japanese Yen retreats from weekly high as USD steadies ahead of US NFP report

The USD/JPY currency pair experienced a slight gain, climbing towards the 158.00 mark, after briefly touching 157.25 during the Asian trading session on Friday. Nevertheless, traders are hesitant to take longer positions, waiting for the US Nonfarm Payrolls (NFP) report to be released. The NFP report plays a significant role in shaping market expectations regarding the US Federal Reserve's actions and consequently the demand for the US Dollar (USD).

Before the crucial data, some traders have adjusted their positions, contributing to the intraday rebound in the USD/JPY pair. However, the overall outlook remains cautious due to subdued USD price action. A favorable Democratic victory in the US midterm elections reduced the likelihood of renewed military strikes against Iran, causing crude oil prices to plummet and alleviating inflationary pressures.

Consequently, investors shifted towards safe-haven assets, leading to a decline in USD and pushing US bond yields to a near two-month low. The Bank of Japan (BoJ) has been supportive of the Japanese Yen (JPY), with policymakers recently agreeing to maintain interest rate hikes and adjust the level of monetary easing. This has reinforced expectations for an interest rate increase in December, bolstering JPY bulls and potentially limiting the USD/JPY pair's recovery.

The pair remains slightly bearish in the near term, as it is below the 200-day Simple Moving Average (SMA) at 158.66. For the USD/JPY pair to move higher, bulls would need to regain the 200-day SMA. Conversely, a break below the daily swing low around 157.25 could provide support in the near term, with the 156.60-156.50 range acting as a potential lower boundary.