On Friday, USD/JPY encounters new supply and is hampered by resurgent JPY demand. The safe-haven JPY is strengthened for several reasons, which puts downward pressure on the pair. At least temporarily, a little USD strength gives some support and aids in limiting the fall.

The pair fails to build on its modest gains from the previous two trading sessions and draws new sellers after a Friday morning spike to the 132.00 regions. Early in the European session, the intraday decline accelerates, pushing spot prices to a new daily low in the 130.60-130.55 range in the previous hour.

According to reports, once Haruhiko Kuroda steps down, the Japanese government intends to choose Kazuo Ueda as the Bank of Japan’s (BoJ) next governor. The study feeds rumour that the BoJ may adopt a more hawkish position later this year due to substantial inflation. This strengthens the Japanese Yen and contributes significantly to the recent decline in the USD/JPY pair we have seen over the last hour.

In addition, the pervasive risk-off atmosphere, which is reflected in a generally worse tone in the stock markets, favours the safe-haven JPY and puts extra pressure on the USD/JPY pair. However, a little increase in the US Dollar‘s strength, supported by recent hawkish comments from numerous FOMC members, offers some support to the major and helps limit its fall, so bears should exercise caution.

Therefore, it will be wise to hold off on making more depreciating moves until there has been some follow-through selling below the weekly swing low, which was struck around the 130.35 region on Thursday. Traders are now anticipating the US’s initial publication of the Michigan Consumer Sentiment Index. The Fed Governor Christopher Waller’s speech, along with this and the overall risk attitude, may give the USD/JPY pair new life.