USD/JPY surrenders intraday gains as US Dollar advances

• USD/JPY falls back as the US Dollar gains on the Fed's support for a restrictive policy stance.
• US President Trump's tariff policies are expected to boost US inflation and weigh on economic growth.
• Japan's National CPI cooled down in February.

The USD/JPY pair gives up entire intraday gains after facing selling pressure around 149.60 and drops to near 148.60 during North American trading hours on Friday. The asset drops as the US Dollar (USD) gains, with the US Dollar Index (DXY) rising to near 104.00.

The Greenback attracts bids as the Federal Reserve (Fed) is unlikely to cut interest rates in the near term. On Wednesday, Fed Chair Jerome Powell stated that they are not in a hurry to cut interest rates amid "unusually elevated" uncertainty over the United States (US) economic outlook under the leadership of President Donald Trump. Powell also warned that Donald Trump's tariff policy tends to push growth lower and inflation higher.

During North American trading hours on Friday, Chicago Fed Bank President Austan Goolsbee and New York Fed Bank President Jon Williams signalled that the current interest rate policy is appropriate as the central bank lacks clarity over Trump's economic policies.

Going forward, investors will focus on the flash US S&P Global Purchasing Managers' Index (PMI) data for March, which will be released on Monday.

In the Asia-Pacific region, soft National Consumer Price Index (CPI) data for February has weighed on the Japanese Yen (JPY). The headline National CPI rose by 3.7%, slower than 4% growth seen in January. The National CPI ex. Fresh Food, which is closely tracked by Bank of Japan (BoJ) officials, grew at a faster-than-expected pace of 3% but pace remained moderate from the prior reading of 3.2%.

However, traders remained confident that the BoJ will tighten the monetary policy further this year as Japan's largest trade union group's, Rengo, showed that firms agreed to raise pay growth by 5.4% this year.