• USD/JPY oscillates in a narrow range and is influenced by a combination of diverging forces.
• A modest USD uptick lends support, though weaker US bond yields cap gains ahead of NFP.
• Expectations for a hawkish shift by the BoJ underpin the JPY and further act as a headwind.

The USD/JPY pair struggles to capitalize on the previous day's modest bounce from the vicinity of the 128.00 mark, or a two-week low and oscillates in a narrow range on Friday. Spot prices seesaw between tepid gains/minor losses and hold steady above mid-128.00s through the early European session.

The US Dollar edges higher on the last day of the week and looks to build on its recovery from a nine-month low touched on Thursday, which, in turn, is seen acting as a tailwind for the USD/JPY pair. The USD uptick could be attributed to some repositioning trade ahead of the closely-watched US monthly jobs report, due for release later during the early North American session.

The US Weekly Initial Jobless Claims data released on Thursday pointed to the underlying strength in the labor market and boosted expectations for strong Nonfarm Payrolls (NFP). This, in turn, forced investors to re-evaluate their expectations for future rate hikes by the Fed and lend some support to the USD. That said, weaker US Treasury bond yields cap gains for the buck.

The Japanese Yen, on the other hand, continues to draw support from expectations that high inflation may invite a more hawkish stance from the Bank of Japan (BoJ) later this year. The bets were lifted by Japan's Nationwide core inflation, which reached its highest annualized print since December 1981. This is seen as another factor keeping a lid on the USD/JPY pair, at least for now.

Bullish traders also seem reluctant to place fresh bets in the wake of the overnight breakdown below a symmetrical triangle and ahead of the key US macro data. Nevertheless, the USD/JPY pair seems poised to register losses for the first time in three weeks.