Yen retreats from weekly high as dollar steadies ahead of US jobs report

The yen weakened against the US dollar on Friday, November 6, surrendering part of its recent gains as investors sought safety in the greenback following a sharp selloff in global technology stocks.

The Japanese currency had briefly reached a one-week high, supported by falling US Treasury yields and expectations of further monetary tightening by the Bank of Japan.

Price overview

During Friday's Asian and early European trading, the USD/JPY pair traded around 157.80, after closing the previous session near 157.69.

The pair opened around 157.49 and fluctuated between approximately 157.42 and 158.01, reflecting uncertainty over the outlook for US interest rates.

Global equity selloff supports dollar

A sharp decline in technology shares, driven by concerns over artificial intelligence investment and regulation, encouraged demand for defensive assets.

The dollar benefited from the broader retreat in risk appetite, although declining Treasury yields limited its advance against the yen.

Bank of Japan tightening expectations

The yen continued to receive underlying support from expectations that the Bank of Japan would maintain its restrictive monetary policy stance.

Investors are assessing whether persistent inflation and wage pressures will justify further interest rate increases, potentially narrowing the yield differential between Japanese and US government bonds.

US employment report in focus

Attention now turns to Friday's US nonfarm payrolls report, with economists expecting approximately 65,000 new jobs in October.

Stronger employment figures could reinforce expectations of another Federal Reserve interest rate increase, supporting the dollar against the yen.

Market outlook

USD/JPY faces immediate resistance around 158.00, followed by 158.50.

Initial support stands near 157.40, with a further decline potentially bringing 157.00 into focus.

The employment figures and movements in Treasury yields will remain central to the yen's near-term direction.