COMMENT-Yen's March run finds new factors to lean on

A soft undertone to the U.S. jobs data has not significantly altered expectations for Fed rate cuts this year, keeping the dollar on the defensive and meaning that any rebound in USD/JPY is likely to be limited due to the broader downward trend of the greenback and the negative impact of tariff policy changes on U.S. stocks.

So far this year, the yen has appreciated in stages, driven by its safe-haven appeal, rising JGB yields, and, most recently, the emergence of euro bulls after Germany proposed a massive spending program.

The yield differentials influencing USD/JPY may be reaching their limits after six weeks of widening, though data points next week could affect Bank of Japan tightening expectations and yen strength.

As some factors influencing the yen's rise move into the rear-view mirror, others are being introduced.

First, U.S.-Japan trade relations will be in the spotlight as Trade Minister Yoji Muto visits Washington early next week.

Second, portfolio adjustments and hedging activities into Japanese fiscal year-end could lend support to the yen. Unless USD/JPY experiences a sharp bounce that is sustained, a decline towards the key 145 pivot level is likely.

In the near term, the market will focus on whether safe-haven yen buying may ease as the S&P 500 attempts to recover from its worst week since September, while traders will scrutinize comments from Chair Jerome Powell later on Friday.