USDJPY consolidates near the 148.00 level and awaits the US NFP report for fresh stimulus

The USDJPY pair extended its sideways consolidation for a second consecutive day on Friday and remained contained inside a limited range into the start of the European session. Traders are awaiting the release of the closely-watched US monthly jobs data (NFP) for a fresh push as the pair is currently trading near the 148.00 round-figure level.

A minor US Dollar decline from Thursday's nearly two-week high works as a drag for the USDJPY pair in the interim. Aside from this, rumors that the Japanese government may intervene again to prevent a sharp decline in the yen further limit the upside potential for spot prices, at least for the time being. However, a significant divergence between the Federal Reserve and the Bank of Japan's (BoJ) monetary policy stances may continue to provide support and restrict any serious drop.

In reality, Fed Chair Jerome Powell shattered expectations for a dovish reversal on Wednesday when he stated that it was too early to talk a stop in the rate-hiking cycle. Powell said that the terminal rate will remain above expectations, which continues to sustain the lofty rates on US Treasury bonds. In contrast, the BoJ has shown no tendency to increase interest rates and has reaffirmed that it will continue to maintain the return on 10-year bonds at 0%. This in turn favors USDJPY bulls and boosts the likelihood of additional gains.

However, traders were reluctant to make aggressive wagers before to the release of critical US macroeconomic data. Along with US bond rates, the well-known NFP report will have a significant impact on USD price dynamics and create possibilities for short-term trading in the USDJPY pair. Despite this, the fundamental environment indicates that the path of least resistance for spot prices is to the downside, and any decline is more likely to be bought.