JAPANESE YEN REMAINS ON THE FRONT FOOT AGAINST USD, HOLDS JUST BELOW TWO-WEEK HIGH

• The Japanese Yen lacks firm intraday direction and is influenced by a combination of diverging forces.
• The BoJ’s hawkish tilt, along with geopolitical risks, seems to lend some support to the safe-haven JPY.
• The Fed’s less dovish outlook offsets the disappointing US ADP report and is seen underpinning the USD.

The Japanese Yen (JPY) attracts some buyers for the second straight day on Thursday and remains well within the striking distance of over a two-week high touched against its American counterpart the previous day. That said, a combination of diverging forces might hold back traders from placing aggressive directional bets, warranting some caution before positioning for a firm near-term direction. Against the backdrop of worries about escalating geopolitical tensions in the Middle East, the Federal Reserve's (Fed) less dovish outlook on interest rates might continue to weigh on investors' sentiment. This, along with expectations for an imminent shift in the Bank of Japan's (BoJ) policy stance, acts as a tailwind for the JPY.

Meanwhile, the recent fall in the US Treasury bond yields has resulted in a further narrowing of the US-Japan rate differential and should lend additional support to the JPY. The US Dollar (USD), on the other hand, stands tall near its highest level since December 13 and is underpinned by the fact that the Fed smashed expectations for an interest rate cut in March. This, in turn, could help limit the downside for the USD/JPY pair. That said, the disappointing release of the US ADP report on private-sector employment on Wednesday and declining US Treasury bond yields cap the Greenback. This makes it prudent to wait for strong follow-through buying before positioning for the resumption of the currency pair's uptrend