In the early trading hours in Asia, the USD/JPY pair experienced a notable decline, closing 0.65% lower last Friday. This downward movement is primarily attributed to the market’s anticipation of a shift in the Bank of Japan’s (BOJ) stance on negative interest rates as we approach the end of March.

Sources close to the matter have indicated that the BOJ is leaning towards sustaining its negative interest rate policy into March. This anticipation has cast a shadow over the currency pair, as investors are closely watching how these potential policy adjustments might impact the yen’s valuation.

A critical event that is expected to influence the BOJ’s decision on its exit strategy from negative interest rates is the outcome of the annual wage talks scheduled for March 13. These discussions are pivotal as they could provide significant insights into the domestic economic landscape and influence future monetary policy decisions.

Further complicating the currency dynamics, a mixed report on the U.S. job market has managed to keep hopes alive regarding the Federal Reserve’s next moves. This ambiguity has somewhat bolstered the Japanese yen, as investors remain on edge about the Fed’s future policy directions.

Investors and traders are eagerly awaiting the release of the U.S. CPI data for February, due on Tuesday. This data is crucial as it will offer fresh clues about the likely trajectory of the Federal Reserve’s policy, particularly in the context of inflation control measures.

In addition to the U.S. CPI data, revised GDP data for Japan’s Q4 is expected to be released on Monday. This revision is anticipated to provide a clearer picture of Japan’s economic performance towards the end of the last year.

From a technical standpoint, the USD/JPY pair showed a trading range between 146.48 and 148.12 last Friday. Key support levels to watch are at 146.50 and 146.20, while resistance levels are identified at 147.50 and 148.00. These levels are critical for traders to monitor as they navigate through the uncertainties surrounding monetary policies and economic indicators in both the U.S. and Japan.

The USD/JPY currency pair is currently navigating through a sea of uncertainties, influenced by anticipations of policy shifts by the BOJ, the outcome of wage talks, and crucial economic data releases from both the U.S. and Japan. Investors and traders alike are advised to stay abreast of these developments, as they could have significant implications for the currency markets in the coming days.