• USD/JPY regains positive traction and reverses a part of the previous day's retracement slide.
• The BoJ-Fed policy divergence turns out to be a key factor acting as a tailwind for the major.
• Traders might refrain from placing aggressive bets and prefer to wait for the US NFP report.

The USD/JPY pair attracts some buying following the previous day's sharp retracement slide from the vicinity of the 144.00 mark, or a four-week high and climbs back closer to the 143.00 mark during the Asian session on Friday. The uptick, however, lacks bullish conviction as traders keenly await the release of the closely-watched US monthly employment details before placing fresh directional bets.

Heading into the key event risk, a big divergence in the monetary policy stance adopted by the Bank of Japan (BoJ) and the Federal Reserve (Fed) is seen acting as a tailwind for USD/JPY pair. In fact, BoJ Governor Kazuo Ueda reiterated last week that the central bank won't hesitate to ease policy further and that more time was needed to sustainably achieve the 2% inflation target. Moreover, the minutes from the BoJ policy meeting showed that members agreed to maintain the current easy monetary policy.

In contrast, Fed Chair Jerome Powell noted that the economy still needs to slow and the labour market to weaken for inflation to credibly return to the 2% target. Adding to this, the incoming stronger US macro data points to continued labour market resilience. which should shield the economy from a recession, allowing the Fed to keep rates higher for longer. In fact, the ADP report showed on Wednesday that the US private-sector employers added 324K jobs in July as compared to the 189K estimated.

Meanwhile, data published by the US Department of Labor (DOL) showed on Thursday that Initial Jobless Claims rose to 227K in the week ending July 29, though layoffs fell to an 11-month low in July amid a tight labour market. This, in turn, remains supportive of the recent rise in the US Treasury bond yields, which might continue to act as a tailwind for the US Dollar (USD). Apart from this, a generally positive risk tone could undermine the safe-haven Japanese Yen (JPY) and lend support to the USD/JPY pair.

Traders, however, seem reluctant to place aggressive bets and look to the crucial US NFP report before determining the next leg of a directional move for the Greenback. This makes it prudent to wait for strong follow-through buying before positioning for an extension of the recent rally from the 138.00 mark touched last Friday. Nevertheless, the USD/JPY pair remains on track to register strong weekly gains and also seems poised to record its highest weekly close since June