Japanese Yen reverses intraday losses against USD; seems poised to appreciate further

• The Japanese Yen attracts some dip-buyers and remains close to a multi-month peak against the USD.
• BoJ rate hike bets and the narrowing US-Japan rate differential continue to act as a tailwind for the JPY. 
• A positive risk tone, tariff jitters, and rebounding US bond yields might cap gains for the safe-haven JPY. 

The Japanese Yen (JPY) reverses an intraday dip against a broadly weaker US Dollar (USD) and remains close to a multi-month high touched earlier this week. The growing acceptance that the Bank of Japan (BoJ) will hike interest rates further continues to underpin the JPY. Furthermore, hawkish BoJ expectations continue to push Japanese government bond (JGB) yields higher. The resultant narrowing of the rate differential between Japan and other countries turns out to be another factor lending support to the lower-yielding JPY. 

Meanwhile, investors remain concerned that US President Donald Trump could impose fresh tariffs on Japan. Apart from this, a goodish pickup in the US Treasury bond yields and a generally positive tone around the equity markets could cap gains for the safe-haven JPY. This, along with the prevalent US Dollar (USD) selling bias, suggests that the path of least resistance for the USD/JPY pair is to the downside. Traders, however, might opt to wait for the release of the US monthly employment details, or the Nonfarm Payrolls (NFP) report on Friday.