USD/JPY struggles for direction, stuck in a range around 115.00 mark as traders await NFP

• USD/JPY was seen consolidating in a range through the first half of the trading on Friday.
• The cautious mood benefitted the safe-haven JPY and capped gains amid weaker USD.
• Rising US bond yields helped limit losses for the USD and extended support to the pair.
• Investors also seemed reluctant to place aggressive bets ahead of the key US jobs data.

The USD/JPY pair lacked any firm directional bias and seesawed between tepid gains/minor losses, around the 115.00 psychological mark heading into the European session.

The pair struggled to capitalize on the previous day's strong move up and witnessed subdued/range-bound price action through the first half of the trading on the last day of the week. The overnight rout in US technology shares weighed on investors' sentiment and benefitted the safe-haven Japanese yen. This, in turn, was seen as a key factor that acted as a headwind for the USD/JPY pair amid a softer tone surrounding the US dollar.

The greenback dropped to a two-and-half-week low amid a more hawkish European Central Bank (ECB)-inspired rally in the shared currency. The downside, however, remains cushioned on the back of some follow-through uptick in the US Treasury bond yields, which extended some support to the USD/JPY pair. Investors also seemed reluctant to place aggressive bets ahead of Friday's release of the closely-watched US monthly jobs data.

The popularly known NFP report, due later during the early North American session, is expected to show that the US economy added 150K jobs in January as against the 199K reported in the previous month. Wednesday's awful ADP report suggested trouble in the US labour market at the start of 2022. Hence, there is a considerable risk of a negative surprise from the official figures, which should be enough to exert fresh pressure on the greenback.

From a technical perspective, the intraday price move might still be categorized as a consolidation phase following the overnight strong rally of around 70 pips. The fundamental backdrop, however, warrants caution for aggressive bullish traders. Hence, it will prudent to wait for some follow-through buying before positioning for any further gains.

Technical levels to watch