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USD/JPY: Insights into Economic Data and Central Bank Policies

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The Japanese Yen experienced a modest recovery from its one-week low against the US Dollar on Friday, hovering near the daily peak as the European session approaches. Investors are eyeing specific price levels for potential sell positions, as the currency nears key supply areas where a reversal may occur. Additionally, the 61.8% Fibonacci level is attracting attention as a potential trigger point for a correction. To anticipate market movements, a sell limit order has been placed just below this Fibonacci level. Furthermore, a sell position has already been initiated in anticipation of a rapid downward movement.

Turning to economic news, the Bank of Japan (BoJ) Governor Kazuo Ueda recently provided a slightly pessimistic outlook on the economy, dampening expectations for a rate hike at the upcoming March 18-19 meeting. Meanwhile, a modest uptick in the US Dollar, fueled by expectations of the Federal Reserve maintaining its higher interest rates strategy to combat inflation, is helping to mitigate downside pressure on the USD/JPY pair. Traders are also exercising caution ahead of next week's significant central bank events.

The BoJ is set to announce its policy decision on Tuesday, followed by the outcome of the two-day Federal Open Market Committee (FOMC) meeting on Wednesday. These events will heavily influence the short-term direction of the USD/JPY pair. In the interim, traders will closely monitor Friday's US economic data releases, including the Empire State Manufacturing Index, Industrial Production figures, and the Preliminary Michigan Consumer Sentiment Index, for potential short-term trading opportunities.