• USD/JPY consolidates just below the 160 handle as intervention risks keep upside in check
• Thin holiday liquidity keeps USD/JPY range-bound ahead of US jobs data.
• Japanese authorities warn against FX volatility as Yen weakness persists.

USD/JPY trades flat on Friday, fluctuating between minor gains and losses as thin holiday liquidity keeps price action subdued. At the time of writing, the pair is trading around 159.58, with traders staying on the sidelines ahead of the US Nonfarm Payrolls (NFP) report.

The upcoming US jobs report is expected to show a mild recovery in hiring, with Payrolls forecast at 60K following February’s sharp 92K decline, while the Unemployment Rate is seen unchanged at 4.4%.

A stronger-than-expected reading could support the US Dollar (USD) and weigh on the Japanese Yen (JPY). However, the upside in USD/JPY appears limited as the pair trades close to the 160 level, which previously triggered intervention, keeping the risk of action by Japanese authorities in focus.

Japan’s Finance Minister Satsuki Katayama said on Friday that authorities are “ready to act firmly” against excessive foreign exchange volatility, warning that “speculative moves in oil and foreign exchange markets have been active.” She added that the government is “prepared to respond on all fronts,” noting that such volatility is “affecting people’s lives.”

This comes as ongoing tensions surrounding the US-Iran war keep the Greenback well supported, while the resulting surge in Oil prices is fueling inflation concerns and weighing on economic growth, complicating the monetary policy outlook across major economies.

Japan’s situation differs from that of the US, as it relies heavily on imported energy, leaving it more exposed to rising Oil prices, while the US, as a net exporter, is relatively better positioned. This backdrop could complicate the Bank of Japan’s (BoJ) normalization path, even as policymakers maintain a gradual tightening bias, with markets pricing in around a 70% probability of a rate hike at the April meeting.

Meanwhile, markets have largely priced out Federal Reserve (Fed) rate cut bets and now expect rates to remain on hold through 2026.