• The greenback is favored by rising odds of a 50 bps rate hike by the Fed
• BOJ’s concern over rising commodity prices weighs on yen
• Japan Finance Minister’s comments also underpins Yen bears.

The US dollar climbed higher against its yen counterpart on Friday trading session ahead of a key U.S. jobs report that could help the Fed to decide on whether to order an interest rate hike of up to 50 basis-points next month.

Experts predict that Friday’s Labor Department report is about to come at 80 K , with the unemployment rate ticking lower while wage growth accelerated.

The FOMC (Federal Open Market Committee) is about to decide policy on May 5, Meanwhile, CME Group’s FedWatch tool is showing 71% odds of a half-point rate increase, and to follow on from a quarter point hike on March 16, when the Fed embarked on its tightening cycle.

The greenback also gains strength due to its safe haven status with peace talks between Russia and Ukraine getting stumbled, although they are set to resume later on Friday.

On the other hand, The elevated prices of base metals, food items, and energy amid Russia’s invasion of Ukraine have led to a devastating impact on the Japanese yen. Japan which is a major importer of commodities is severely effected by the wider fiscal deficit.

Mitsuhiro Furusawa, who was the head of currency intervention at Japan’s Ministry of Finance, has shown worries over the vulnerable yen citing that it is not good for the yen to keep dropping as it reflects Japan’s competitiveness.

Moreover, Yen bears were also underpinned by the Japanese Finance Minister’s comments that the Bank of Japan does not target foreign exchange rates.

USD/JPY 4 Hour chart:

Support: 121.15 (S1), 120.63 (S2), 119.98 (S3).

Resistance: 122.32 (R1), 122.97 (R2), 123.50 (R3).

The rising commodities prices amidst other catalysts weighs on yen, we expect a bullish trend for USD/JPY.