The Japanese yen is dominating the start of the week, with USD/JPY extending its decline below 155 and trading towards 153. Thin liquidity around the US holiday likely exaggerated the initial move, but the follow-through suggests this is more than just a liquidity event.
The move still looks primarily like a yen story rather than a broad rejection of the US dollar. Markets are increasingly focused on the prospect of a more hawkish Bank of Japan, alongside expectations that Japan’s GPIF could increase its allocation towards domestic assets. That combination is encouraging investors to unwind yen-funded carry trades and rebuild exposure to Japanese assets.
From a technical perspective, USD/JPY remains firmly inside its descending channel. The break below 155.00 has weakened the structure further, with 152.00 now the next meaningful support area. That level marked an important floor earlier in the year. A decisive break below it would bring 150.00 into view.
For now, trying to fade the yen rally looks risky. Even if the short-term fundamental move appears stretched, carry-trade unwinding can become self-reinforcing: a stronger yen forces leveraged positions to reduce exposure, which creates further yen buying and adds momentum to the move.
The bigger question is whether this yen strength can continue if the Federal Reserve tightens policy next week.
The broader dollar backdrop remains more constructive than USD/JPY currently suggests. Strong US payrolls and Brent crude trading close to $100 per barrel both argue against an aggressively dovish Fed, yet markets are still pricing only around 15 basis points of tightening for September. That leaves scope for US yields and the dollar to reprice higher if incoming inflation data remain firm.
US equity futures are pointing towards a softer reopening today. In an otherwise light calendar, weaker risk sentiment could provide some support to the dollar, although probably not enough on its own to reverse the current yen momentum.
The main event for the week is therefore Friday’s US CPI report. A hotter inflation print would strengthen the case for Fed tightening and could challenge the current USD/JPY sell-off. A softer number, however, would remove one of the dollar’s remaining supports and potentially allow the move towards 152 and 150 to continue.
USD/JPY za poslední čtyři obchodní dny klesl téměř o 3,6 %, protože trh dál sází na zásahy Japonska do kurzu a na vyšší sazby Bank of Japan. Ministerstvo financí uvedlo, že do 26. srpna použilo na intervencích zhruba 98,6 miliardy dolarů.
The yen has continued to gain relevance during recent trading sessions and, over the last four trading days, USD/JPY has declined by nearly 3.6%, highlighting the strength currently being displayed by the Japanese currency against the U.S. dollar. This selling pressure has remained in place as markets continue digesting recent updates regarding Japan's currency interventions while also maintaining expectations of a more aggressive Bank of Japan. As long as these factors remain dominant, downside pressure on USD/JPY could continue to be an important feature of the market in the sessions ahead.
Is Intervention Risk Returning to Japan?
The most important short-term development behind the yen's recent strength relates to the latest confirmations regarding Japan's efforts to support its currency through direct intervention.
Recent data revealed that Japan carried out a record intervention program during August. International reserves declined by approximately $76.6 billion, marking the largest monthly drop seen in recent years and falling from July's peak of $1.287 trillion in total reserves. As a result, markets have interpreted a significant portion of this decline as being linked to yen-buying operations.
In addition, the Ministry of Finance confirmed that approximately $98.6 billion was deployed in currency interventions through August 26, including operations conducted in coordination with the United States. This information is particularly important because it confirms that intervention threats are no longer merely theoretical but are instead supported by figures directly released by the Japanese government.
The market's interpretation has been straightforward: Japanese authorities remain willing to sell dollars and buy yen aggressively whenever they believe the currency is under excessive pressure. Consequently, this confirmation has increased expectations that intervention could continue to play an important role in the months ahead, helping reinforce demand for the yen over the short term.
Alongside this situation, expectations of a more restrictive monetary policy from the Bank of Japan also remain important. Markets are currently assigning more than a 62% probability to a rate increase at the September 17 meeting, taking the benchmark rate from 1.00% to 1.25%. This reflects continued expectations that Japan will gradually move away from the ultra-low interest rate environment that has characterized its monetary policy for decades.
Source: centralbankwatch
Taking all of this into account, the outlook surrounding the yen appears to have changed significantly compared with previous weeks. Expectations of additional interventions and a more aggressive Bank of Japan are helping support interest in the Japanese currency. On one hand, markets continue to consider the possibility of renewed yen purchases by authorities. On the other, higher interest rates improve the relative attractiveness of yen-denominated investments. As long as these factors remain in place, downside pressure on USD/JPY could continue to be an important feature of the short-term outlook.
Could the U.S. Dollar Become a Threat?
At the same time, it is important to recognize that the main obstacle to further yen strength could remain the U.S. dollar. This issue gained importance after last Friday's NFP report, which delivered employment figures well above expectations and once again supported the possibility of a more aggressive Federal Reserve.
Although this dynamic has not yet translated into a significant recovery in the dollar itself, it could become a relevant factor over the coming weeks. For now, the DXY Index continues to trade around the 98-point area without registering meaningful declines and remains relatively stable near the lows established in recent weeks.
Part of this lack of reaction may be explained by the U.S. market holiday, which tends to reduce both activity and volatility across financial markets.
Source: TradingEconomics
The key point to monitor is whether expectations of a more hawkish Federal Reserve begin translating into a more meaningful recovery in the dollar. If that occurs, part of the yen's recent advance could begin to face resistance. Under such a scenario, USD/JPY could move into a more balanced trading environment, particularly if both central banks continue progressing toward more restrictive policy settings over the coming months.
USD/JPY Technical Outlook
Source: StoneX, Tradingview
A Potential Trendline Begins to Take Shape: The recent decline in USD/JPY has led to the formation of a sequence of increasingly lower lows on the chart, a development that is beginning to shape a potential bearish trendline. As long as selling pressure remains dominant, this structure could continue to strengthen and become the most important technical pattern to monitor in the weeks ahead.
MACD: The MACD histogram continues to move below the neutral 0 line, indicating that the average strength of short-term moving averages remains tilted toward the downside. As long as this behavior persists, bearish momentum could continue dominating market activity.
RSI: A similar dynamic can be seen in the RSI, which continues to move lower below its neutral threshold. However, it is also worth noting that the indicator has now fallen below the 30 oversold level. This suggests that selling pressure may be becoming excessive in the short term and could create room for temporary bullish corrections over the coming sessions.
Key Levels:
158.235 – Key Resistance: This level coincides with the 200-period Simple Moving Average and represents the most important upside barrier on the chart. Price action returning toward this area could challenge the formation of the current bearish structure and favor a broader phase of consolidation during the weeks ahead.
155.928 – Nearby Barrier: This area corresponds to the nearest retracement zone on the chart and stands as the primary reference point for potential short-term bullish corrections.
152.441 – Key Support: A support area not seen since February and currently the most important downside barrier within the market. A move toward this level could reinforce the dominant bearish bias and further confirm the downtrend structure that has emerged during recent sessions.
Written by Julian Pineda, CFA, CMT – Market Analyst
USD/JPY na začátku týdne klesl o více než 1 % v asijském a časně evropském obchodování v pondělí a jen se dostal na nejvyšší úroveň za více než šest měsíců. Průlom pod 155,20 znovu potvrdil medvědí výhled.
USDJPY accelerated lower at the start of the week (down over 1% in Asian / early European trading on Monday), attempting to resume a sharp fall of last week, which made a brief pause on Friday.
Japanese yen was lifted from its multi-decade lows by the first intervention in late July and received fresh boost by strong hawkish shift in BoJ’s rhetoric which signals rate hike in September policy meeting (most of economists expect 25 basis points hike but 50 basis points increase is also in play) as well as change in traders’ sentiment favoring further yen longs.
Today’s violation of key 155.20 support zone (lows of Aug 3 / Sep 3,4), generates negative signal of bearish continuation on completion of bearish failure swing pattern on daily chart, with break below 154.78 (Fibo 38.2% of 139.88/163.98 uptrend) to validate signal and expose targets at 152.00 zone Jan 25 trough / 50% retracement) and 150.92 (27 July 2025 spike high).
Daily studies are in full bearish configuration (with the latest formation of 10/200DMA death cross) but oversold, that may provide headwinds, along with significant support provided by the top of rising and thick daily cloud (154.26).
Immediate resistances lay at 154.78 (cracked Fibo 38.2%) and 155.20, with stronger upticks to be ideally capped under 156.50/75 zone, to keep larger bears intact and provide better selling levels.
USD/JPY i DXY oslabují po průrazu pod klíčové supporty, zatímco vyšší výnosy amerických dluhopisů, 10letý výnos poblíž 4,8 % a očekávání zvýšení sazeb BOJ o 25 bazických bodů na zasedání 17.–18. září dál drží dolar v dlouhodobě býčím trendu. Klíčové úrovně DXY sledují pásma 98,50, 98, 97 a 95,50, zatímco u USD/JPY je důležitá hranice 154,80, následovaná 152 a 149; naopak návrat nad 158,40, 161 a 164 by obnovil sílu jenu vůči dolaru.
The USD/JPY and DXY charts are approaching defining support levels, creating a conflict between short-term weakness, long-term bullish continuation risks, and the risk of a broader structural bearish shift.
Several factors are contributing to volatility risks across both charts:
Rising U.S. Treasury yields: The U.S. 10-year Treasury yield recently reached a new 2026 high near 4.8%, widening the interest-rate differential between the United States and Japan
Bank of Japan rate-hike expectations: Markets are pricing in the possibility of a 25-basis-point rate hike at the BOJ meeting scheduled for September 17–18. This expectation is providing short-term support for the yen.
Crude oil and geopolitical risks: Crude oil prices have broken above a 7-month resistance level, increasing concerns about supply disruptions and inflation. This could support the dollar through safe-haven demand, although persistently higher oil prices could also raise concerns about global growth.
As of September 7, the fundamental and technical picture remains tilted towards geopolitical risks. Short-term dollar weakness is visible, but the broader risk narrative continues to support the possibility of renewed dollar strength if inflation, yields, and geopolitical tensions remain elevated.
DXY Price Outlook: Monthly Time Frame — Log Scale
Source: TradingView
Despite the DXY breaking below its 2026 uptrend, signaling short-term weakness, the longer-term structure remains tilted to the upside.
The key downside levels I am watching align with the Fibonacci retracement levels of the 2026 uptrend: 98.50, 98, 97 and 95.50. The 95.50 area is the defining barrier between a structural breakdown of the 18-year uptrend and a potential continuation of the longer-term bullish structure.
On the upside, reclaiming the 2026 uptrend near 100.30, followed by a move above 101 and 101.70, would restore the dollar’s strength against major markets. Such a move could lift the DXY toward new 2026 highs and add further pressure on Japanese officials facing persistent yen weakness.
This situation could become more critical if the interest-rate differential between the United States and Japan continues to widen.
Key DXY Scenarios
Bullish scenario: A recovery above 100.30, followed by a breakout above 101 and 101.70, would signal renewed dollar strength and support a move toward new yearly highs.
Bearish scenario: A sustained breakdown below 98.50 and 98 would increase the risk of a deeper correction toward 97 and 95.50. A clear break below 95.50 would confirm a more significant structural shift and challenge the long-term bullish trend.
USD/JPY Price Outlook: Weekly Time Frame — Log Scale
Source: TradingView
Technically, USD/JPY is breaking below a 3-month support level, signaling short-term yen strength while simultaneously approaching an uptrend support zone that has been in place since 2023.
Key Patterns and Scenarios in Focus
The breakdown below the April 2025–July 2026 channel points to short-term weakness and aligns with the Fibonacci retracement levels of that advance.
Price action is currently testing a breakdown below 154.80, the 38.2% retracement level. A sustained move below this level could target 152, corresponding to the 50% retracement, followed by 149 near the 61.8% retracement level.
The 149 area could become an important zone for a potential long-term rebound, aligning with the golden ratio, the broader 2023–2026 uptrend and increasingly oversold momentum conditions.
Bearish scenario: A clear breakdown below 149 would confirm broader structural weakness and increase the risk of a deeper correction in USD/JPY.
Bullish scenario: Holding above 149 would preserve the broader bullish structure. On the upside, reclaiming the 2026 uptrend boundaries near 158.40, 161 and 164 would restore USD/JPY strength and expose the upper channel boundary near 170.
Short-term weakness, the potential for long-term dollar strength and persistent geopolitical risks are shaping the outlook for USD/JPY and the DXY.
The next major catalysts include the U.S. CPI report on Friday, the BOJ meeting on September 17–18 and the FOMC meeting on September 16. The reaction in Treasury yields and the direction of crude oil prices will remain critical in determining whether the current weakness develops into a deeper structural decline or becomes another correction within a broader bullish trend.
The Japanese Yen (JPY) trades flat against the US Dollar (USD) at around 156.00 at the start of the week, but is close to its four-month low of 155.23. The pair is broadly firm due to JPY’s last week's outperformance, which came on the back of hawkish commentary from Bank of Japan’s (BoJ) board member Hajime Takata.
Yen surge raises questions over BoJ intervention and rate pathAnalysts at MUFG highlight that there were “significant moves in the FX market, with the Japanese yen in particular strengthening sharply from the 160 level on 2 Sep all the way down to as low as 155.30 overnight, a 5 big figure move.” They note that it came more broadly on the policy backdrop, flagging that “BoJ Board Member Takata – one of BOJ’s most hawkish members – gave a speech earlier this week leaving the door open for an outsized interest rate increase as well as back-to-back hikes,” reinforcing market speculation that the BoJ could countenance a more aggressive tightening path if conditions warrant.
MUFG also flagged a weak US Dollar as another trigger for significant weakness in the US Dollar, and ruled out the possibility of BoJ’s intervention. “It is not entirely clear whether the moves in USD/JPY were driven by FX intervention,” although “BoJ current account data for Wednesday do not suggest the moves were driven by intervention,” pointing instead to broader Dollar weakness and regional FX gains as key drivers, MUFG said.
Meanwhile, investors await the United States (US) Consumer Price Index (CPI) data for August, which will be published on Friday. The US inflation data is expected to have a significant impact on the Federal Reserve’s (Fed) interest rate expectations.
USD/JPY Technical Analysis
In the daily chart, USD/JPY trades at 155.95, keeping a bearish near-term bias as spot holds well below the 100-day Simple Moving Average (SMA) at 159.92. The distance to this SMA suggests the broader uptrend framework remains above price, with sellers in control for now.
The Relative Strength Index (RSI) at about 32 hovers just above oversold territory, hinting that downside momentum is stretched but not yet signaling a confirmed reversal.
On the topside, the 100-day SMA at 159.92 is the first meaningful resistance that bulls would need to reclaim to ease the current downside pressure and reopen a path toward higher levels. Looking down, the four-month low at 155.25 is the key support zone; below that, the pair could face a fresh downside leg.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Bank of Japan FAQs The Bank of Japan (BoJ) is the Japanese central bank, which sets monetary policy in the country. Its mandate is to issue banknotes and carry out currency and monetary control to ensure price stability, which means an inflation target of around 2%.
The Bank of Japan embarked in an ultra-loose monetary policy in 2013 in order to stimulate the economy and fuel inflation amid a low-inflationary environment. The bank’s policy is based on Quantitative and Qualitative Easing (QQE), or printing notes to buy assets such as government or corporate bonds to provide liquidity. In 2016, the bank doubled down on its strategy and further loosened policy by first introducing negative interest rates and then directly controlling the yield of its 10-year government bonds. In March 2024, the BoJ lifted interest rates, effectively retreating from the ultra-loose monetary policy stance.
The Bank’s massive stimulus caused the Yen to depreciate against its main currency peers. This process exacerbated in 2022 and 2023 due to an increasing policy divergence between the Bank of Japan and other main central banks, which opted to increase interest rates sharply to fight decades-high levels of inflation. The BoJ’s policy led to a widening differential with other currencies, dragging down the value of the Yen. This trend partly reversed in 2024, when the BoJ decided to abandon its ultra-loose policy stance.
A weaker Yen and the spike in global energy prices led to an increase in Japanese inflation, which exceeded the BoJ’s 2% target. The prospect of rising salaries in the country – a key element fuelling inflation – also contributed to the move.
Goldman sees USD/JPY falling to 140-145, while Crédit Agricole forecasts a rebound to 163 by December. The US Dollar to Japanese Yen (USD/JPY) exchange rate ended Friday near 156.25 following one of its sharpest weekly reversals of 2026.
USD/JPY fell from above 160.00 to a low near 155.31 before recovering 0.38% during Friday's session.
The move has opened a striking disagreement between a Goldman Sachs trader and Crédit Agricole.
Image: USD JPY 48hr chart The 48-hour chart shows the pair falling almost continuously from 158.95 before stabilising around 156.25.
Support is located near 155.30, while a recovery through 157.10-157.25 would weaken the immediate bearish signal.
Goldman analyst outlines 140-145 scenario A Goldman G10 spot trader linked the Yen's advance to hawkish Bank of Japan comments, carry-trade liquidation and speculation that Japan's GPIF could increase its domestic bond allocation.
The trader said: "If US data comes in softer, or the Fed isn't able to hike, and in combination with that, the BOJ come across more hawkish, I think you can see USDJPY continue to grind lower. But it really is all about this shift from the GPIF which really gets us lower into the 140-145 range over the next 6-12 months."
The 140-145 range is a conditional trader view, not the official Goldman Sachs house forecast.
Friday's 162,000 payroll increase also challenges one of its central assumptions by reducing the immediate risk of softer US data or a less hawkish Federal Reserve.
Crédit Agricole sees a return to 163 Crédit Agricole takes the opposite near-term view, forecasting USD/JPY at 162 in September and 163 in December.
Its projections then decline gradually to 162 in March 2027, 161 in June, 158 in September and 156 by December 2027.
The bank said: "Record levels of intervention have capped USD/JPY’s rally at 164, but for the JPY to stage a sustainable rally the BoJ needs to accelerate the pace of its rate hikes reducing the currency’s appeal as a carry funder."
It added: "Elevated oil prices and investor concerns about Japan’s fiscal sustainability still weigh on the JPY."
A GPIF shift could change that balance.
Crédit Agricole noted: "If Japan’s GPIF allocates more of its AUM to domestic bonds capping super-long end JGB yields, fiscal sustainability concerns would ease."
The MUFG forecast for USD/JPY at 152 sits much closer to the Goldman trader's direction than Crédit Agricole's 163 call.
Price action around 155.30 and 157.25 will provide the first indication of whether the latest Yen surge is extending or beginning to correct.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
USD/JPY v týdnu prudce oslabil, ale silná americká data z payrolls obnovila sázky na zářijové zvýšení sazeb Fedem. Trh teď čeká hlavně na čtvrteční PPI a páteční CPI.
Suspected intervention helped drive USD/JPY sharply lower
September BOJ hike now fully priced
Payrolls revived September Fed hike expectations
CPI and PPI dominate this week’s US calendar.
USD/JPY moves remains tightly linked to US Treasury yields
USD/JPY suffered its largest weekly loss since late July as we entered September, hit by relatively dovish remarks from senior Fed officials and possible intervention from the Bank of Japan on behalf of the Japanese government.
However, an unusually strong August payrolls report in the United States on Friday managed to resuscitate not only rate hike pricing for the Fed’s meeting the week after next, but also stall what had been an abrupt move lower in the pair.
With a strong and strengthening relationship with gyrations in US bond yields, how the Fed rate outlook evolves this week will likely determine where USD/JPY finishes up on Friday.
Inflation Data Set to Drive Fed Pricing
Thursday’s PPI and Friday’s CPI reports stand out as the known knowns most likely to impact USD/JPY this week.
Both will not only help shape expectations for what core PCE may print at later this month, but could go a long way to determining whether the Fed begins a new tightening cycle in September.
Source: TradingView
The timing is especially important given conflicting messages from senior Fed officials over the past week. Chair Kevin Warsh struck a hawkish tone at Jackson Hole, making it clear he remained uncomfortable with inflation and that the Fed still had work to do if price pressures failed to ease sufficiently. Governor Michael Barr also sounded relatively hawkish, reinforcing the sense that another hike remained firmly on the table.
But that messaging was subsequently tempered by New York Fed President John Williams, who said the case for a September hike “isn’t yet firm”, and Governor Christopher Waller, who said he would support keeping rates unchanged if August inflation continued to cool.
With the Fed now in blackout ahead of the September meeting, it will therefore leave the data to do the talking.
At the very least, the core figures probably need to print in line with expectations, if not a touch above, to really cement the case for a September hike. If that happens, you’d expect market pricing to follow, with the probability of a move currently sitting just shy of two in three.
The underlying detail will also matter, particularly in areas of the economy that are more heavily influenced by domestic factors, such as services inflation excluding housing and energy services.
If the core readings undershoot, market pricing for a September hike would likely ratchet lower, leaving December as the more likely candidate as the Fed and markets have more time to assess incoming economic data.
While history suggests the more volatile market reaction normally comes following CPI, PPI arrives first on this occasion, meaning it could provide markets with a strong steer on whether upside or downside inflation risks are prevalent heading into Friday.
Treasury Auctions Enter the Spotlight
Another area of note on the US calendar will be Treasury supply, with three, 10 and 30-year auctions scheduled across the week. They arrive at a time when there’s already plenty of unease around Fed credibility and the size of the US deficit.
US President Donald Trump’s threat on Friday to impose tariffs on countries if the Fed doesn’t cut rates could, at the margin, dissuade international investors from participating in those auctions.
We also get the Treasury’s monthly budget statement on Friday. If that delivers another ugly deficit print, as we saw in the July figures, it could place renewed upward pressure on Treasury yields.
Contrary to what you might normally expect from renewed fiscal concerns, given the strong positive relationship between USD/JPY and moves in US Treasury yields over recent weeks, any renewed move higher in yields from weak auction demand or another poor budget print could also help generate upside in the pair.
Source: Bloomberg
Japan Data Must Back the Hawkish Shift
On the Japanese side of the ledger, the impetus to sustain the strengthening in the yen seen last week will come down to key wages and upstream PPI data released during the week.
There’s been a distinct hawkish repricing of the Japanese rates outlook over the past couple of weeks, with a September hike now fully priced and an over 80% probability attached to a follow-up move in December.
Source: TradingView
It will be left to those reports, along with the detail in the final read of Q2 GDP released on Tuesday, to justify those expectations. If we see weakness relative to market expectations, it runs the risk of pushing BOJ policymakers back towards a more cautious stance on the cadence of policy tightening.
The detail in the GDP report will also be important. The initial release was soft beneath the headline, with weakness in household consumption especially prominent.
Even though the report now comes across as a little like ancient history, stronger underlying detail would still help build confidence in the virtuous cycle the BOJ wants to see between strengthening wage pressures, firmer demand and self-sustaining inflationary pressures. At the margin, that will be another important consideration for the rates outlook.
US Rates Link Tightens
Despite the hawkish repricing of the Japanese rates outlook, the correlation matrix below continues to point to a very strong linkage between USD/JPY and outright movements in US Treasury yields.
Source: TradingView
Over the past five days, the correlation with the US 2-year yield sits at 0.80, rising to 0.89 with the US 10-year and 0.76 with the 30-year. That compares with just 0.26 for the US-Japan 2-year yield spread and -0.46 for the 10-year spread over the same period.
So even though Japan’s rates outlook has undergone quite a major hawkish transition recently, the message from the matrix remains one where the US rates outlook, along with the implications further out the curve, continues to have a vice-like grip on movements in USD/JPY.
It’s also worth pointing out that we’re seeing an unusual positive correlation between USD/JPY and both VIX and MOVE, which is contrary to what you’d normally expect given the yen’s status as a funding currency for carry trades. At the same time, the inverse relationship with risk assets has persisted and strengthened, with the five-day correlation with S&P 500 futures sitting at -0.94.
What’s also notable is that the damage higher energy prices had been doing to the yen appears to have weakened. That relationship had been driven by concerns around Japan’s energy security and the deterioration in its terms of trade, yet the yen managed to strengthen last week even as energy prices continued to rise.
USD/JPY Respects the Range
Source: TradingView
While the question as to whether the BOJ was instructed to intervene last week remains unanswered, despite the violence of the bearish unwind, USD/JPY continues to be respectful of known technical levels, providing something akin to a blueprint for traders to focus on.
The immediate range in focus is 156.68 on the topside and 155.50 on the downside, with the former coinciding with the low set on August 7, while the latter is the top of a zone that has sparked some savage bounces over the course of this year.
While the overall message from the oscillators continues to favour selling into strength and downside breaks, with RSI (14) still sitting at 34 and MACD remaining beneath the signal line in negative territory, the rapid increase in downside momentum looks to have reversed slightly thanks to the strong payrolls print last Friday.
My view is therefore to place greater emphasis on price action rather than holding a specific directional bias in the near term. While we entered this range at rapid velocity from above, you can’t dismiss the fact we’ve seen some big bounces from this zone in the past.
On the topside, above 156.68, the levels to keep an eye on are 158, which has acted as both support and resistance for periods this year, and 159.50, another similar level above that.
Underneath, 155.50 down to 155 has been the support zone where bids have been lurking this year. A clean break beneath the lower rung of that zone could bring 154 into play, which has acted as both resistance and support for periods this year, along with 152.09, 151.50 and a more prominent support level at 151.
Why Brent’s break above $97 is failing to lift Dollar, and why Japan, not oil, is setting today’s currency direction What’s happening: USD/JPY broke decisively through 157.99 to around 156, bringing the 155 area back into range, as Yen’s rally gathers fresh momentum from speculation that Japan’s roughly $2 trillion GPIF could raise its domestic bond allocation, on top of an already-hawkish BoJ repricing. At the same time, Brent climbed to an intraday high around $97.62, its strongest level in six weeks, as the US-Iran conflict shows signs of extending well beyond 2026.
Why it matters: Brent above $97 and a conflict that could extend into 2027 would normally form a potent Dollar-supportive combination through inflation and rates. Instead, Dollar is broadly weaker because Japan has taken control of the FX narrative. Oil is still setting global inflation risk, but today, Japan is setting currency direction.
Yen Takes Over as GPIF Speculation Adds to BoJ Repricing Yen extended its powerful rally on Thursday, sending USD/JPY decisively through 157.99 to around 156 and putting the 155 area back within reach. Latest leg appears to have received fresh fuel from speculation surrounding Japan’s roughly $2 trillion Government Pension Investment Fund. GPIF held an unusual management committee meeting on August 21, its first August meeting since 2019, and revisited discussion around its basic portfolio only five months after a March assessment concluded that a review was unnecessary.
Market interest centers on whether GPIF could eventually raise its strategic allocation to domestic assets, particularly government bonds. Domestic bonds currently carry a 25% target allocation, alongside 25% each for domestic equities, foreign bonds and foreign equities. The timing is significant because Japan’s 10-year government bond yield has climbed roughly one percentage point since March and briefly reached 3.015% this week, highest since 1996. Higher domestic yields are already changing relative attractiveness of Japanese assets, with Japanese investors reducing overseas bond exposure this year. A larger GPIF domestic allocation would reinforce that repatriation theme and potentially relieve some upward pressure on JGB yields.
That speculation is adding to a much broader Yen-positive repricing already underway. BoJ officials have become increasingly explicit about further tightening, with markets now focused not only on a possible September hike but on a faster cycle over coming year. Japan’s top currency diplomat Atsushi Mimura added another layer of caution Thursday, saying he was “neither satisfied nor reassured” by recent Yen developments and that authorities remained on “a state of heightened alert.” He declined to confirm whether officials had conducted a rate check. Traders nevertheless continue to attribute Yen strength primarily to BoJ tightening expectations rather than fresh intervention.
The 155 level is critical. USD/JPY is approaching the same territory reached after July’s record intervention campaign, which cost Japan roughly $96.5bn and included rare US participation. The 155.22 area marks July’s post-intervention low, while 155.01 provides nearby technical support. This time, however, pair is approaching those levels organically rather than through any confirmed official Yen buying.
Why the 155 Level Matters Japan’s 10-year JGB yield: briefly reached 3.015% this week, highest since 1996. July’s record intervention: cost roughly $96.5bn, included rare US participation. 155.22: July’s post-intervention low. 155.01: nearby technical support. Mimura: “neither satisfied nor reassured,” authorities on “a state of heightened alert.” July’s Intervention-Driven Move vs. Today’s Organic Approach to 155 July’s Intervention Today How USD/JPY reached this territory Record intervention, cost roughly $96.5bn, included rare US participation Approaching organically, no confirmed official Yen buying Key levels 155.22 (post-intervention low), 155.01 (support) Same levels now back within reach Attributed driver Direct official Yen buying BoJ tightening expectations and GPIF speculation Dollar Weakens Even as Oil Sends a Normally Bullish Signal Yen’s surge has become dominant force in FX, with Dollar lower against all major counterparts despite a backdrop that would normally be considerably more supportive. In Dollar index specifically, Yen’s sizeable weighting means its appreciation directly pulls index lower. More broadly, modest easing in Treasury yields has allowed Dollar weakness to spread across EUR, GBP and CHF as traders focus on Japanese policy repricing rather than extending this week’s US rates trade.
That creates today’s most counterintuitive cross-asset signal. Brent has broken above $97 to fresh six-week highs as US-Iran conflict intensifies, yet Dollar is falling. Earlier this week, higher oil transmitted relatively cleanly through inflation fears into higher Treasury yields and firmer expectations for Fed tightening. That channel has not disappeared, but it is being overshadowed in FX by Yen’s much larger independent move and the pause in US yields.
Wednesday’s softer ADP report, with private payrolls rising only 38K, contributed to that pause in further hawkish repricing, but it is not the principal driver of Thursday’s Dollar move. Initial jobless claims subsequently matched expectations at 206K, offering little additional direction. Markets still attach substantial probability to September Fed hike, leaving Friday’s NFP as decisive test. For now, more revealing question is not simply why Dollar is weaker, but why Brent above $97 has failed to make Dollar stronger. Answer lies in Japan: Yen and BoJ repricing have become larger currency-market forces today.
Oil Story Shifts From Escalation to Duration Brent meanwhile climbed to an intraday high around $97.62, extending this week’s rally and reaching its strongest level in six weeks. But narrative is beginning to shift. Earlier phases of renewed fighting were dominated by immediate questions over each US strike, Iranian retaliation and potential disruption to Strait of Hormuz. Markets are now considering a more difficult possibility: conflict and impaired regional energy flows could persist into 2027. Recent market commentary has explicitly moved toward that longer time horizon, with Capital Economics expecting restoration of Middle East energy flows to be delayed until early next year and forecasting Brent around $100 by end-2026.
That matters more for inflation than another isolated military exchange. A conflict measured in additional months rather than days would prolong pressure on shipping, inventories and refined-product markets, increasing chances that energy inflation becomes persistent enough to influence central-bank decisions. Iranian retaliation has also widened geographically, while US officials continue to signal that military pressure could intensify again even as Washington tries to limit escalation ahead of November elections. Reuters reported that administration officials see possibility of more intense attacks after midterms, underscoring absence of a clear near-term exit from a war now in its seventh month.
The closing contradiction is therefore striking. Brent above $97 and rising concern that US-Iran conflict could extend into 2027 would normally form a potent Dollar-supportive combination through inflation and rates. Instead, Dollar is broadly weaker because Japan has taken control of FX narrative. Oil is still setting global inflation risk, but today, Japan is setting currency direction.
Related Coverage Yen & Precious Metals Deep Dives Read why Silver’s rebound from 63.27 still depends on holding 62.54-62.92 to keep its five-wave recovery from 54.77 alive ahead of Friday’s NFP: Silver’s Correction Has Reached Its Line in the Sand — What Happens Next?. See why Friday’s NFP creates an asymmetric setup for USD/JPY, with weak data opening a clearer path toward 155 than strong data does above 160: USD/JPY Tumbles Under the Shadow of Intervention, Faces Asymmetric NFP Test. US Data Deep Dive Read why jobless claims matching expectations at 206K still leaves Friday’s NFP as the clearer labor-market signal: US Initial Jobless Claims Rise from 204K to 206K. Global Inflation Deep Dives See why Eurozone PPI’s swing to +1.6% m/m was driven largely by a 5.6% jump in energy prices, with annual producer inflation accelerating to 5.8%: Eurozone PPI Surges 1.6% M/M as Energy Drives Renewed Producer Inflation (full Eurostat release). Read why Swiss CPI’s jump to 0.8% was driven mostly by energy and imported prices, with core inflation holding at 0.4%: Swiss CPI Jumps to 0.8%, but Energy Drives Much of Inflation Surprise. Global PMI Round-Up See why UK services hitting a four-month high still came with employment falling for a 23rd straight month: UK PMI Services Hits Four-Month High as Cost Pressures Reaccelerate. Read why Eurozone’s composite PMI holding at an eight-month high alongside stalled disinflation is strengthening the case for ECB tightening: Eurozone PMI Composite Holds Firm as Sticky Prices Strengthen ECB Tightening Case. See why Japan’s record composite selling-price inflation is adding to the case for another BoJ hike even as growth accelerates: Japan PMI Growth Accelerates as Record Selling Prices Strengthen BoJ Hike Case. Read why Australian services confidence hit a six-month high even as fuel and wage costs kept input inflation elevated: Australia PMI Services Holds Firm at 53.2 as Confidence Rises but Costs Stay High. See why China’s services and composite PMI gains reflect stronger domestic demand and sustained hiring: China RatingDog PMIs Strengthen as Services and Employment Gain Momentum. Frequently Asked Questions Q: Why is Dollar falling even though oil just broke above $97? A: Because Yen’s much larger, independent move is overwhelming the usual oil-to-Dollar transmission channel. Higher oil normally supports Dollar through inflation fears feeding into higher Treasury yields and firmer Fed tightening expectations, and that channel hasn’t disappeared. But Yen’s sizeable weighting in the Dollar index, combined with a pause in US yields, means Japanese policy repricing is currently the bigger force in FX. The real question today isn’t why Dollar is weaker, it’s why Brent above $97 hasn’t made it stronger, and the answer is Japan.
Q: What is GPIF and why does speculation about it matter for Yen? A: GPIF is Japan’s roughly $2 trillion Government Pension Investment Fund. It held an unusual management committee meeting on August 21, its first August meeting since 2019, revisiting its basic portfolio just five months after concluding in March that no review was needed. Markets are watching whether GPIF could raise its 25% target allocation to domestic bonds. A larger domestic allocation would reinforce the repatriation trend already underway as Japanese investors reduce overseas bond exposure, adding further support to Yen and potentially easing some upward pressure on JGB yields.
Q: How is this approach to 155 different from July’s intervention? A: July’s move to the 155 area came from a record, roughly $96.5bn intervention that included rare US participation. This time, USD/JPY is approaching the same 155.22 and 155.01 levels organically, with no confirmed official Yen buying. Traders are attributing the move to BoJ tightening expectations and GPIF speculation rather than direct intervention, even though currency diplomat Mimura says authorities remain on “a state of heightened alert.”
Key Takeaways USD/JPY broke through 157.99 to around 156: Bringing the 155 area back into range for the first time since July’s intervention. GPIF speculation is adding fresh fuel to Yen’s rally: Markets are watching whether Japan’s roughly $2 trillion pension fund raises its 25% domestic bond allocation after an unusual August 21 committee meeting. Japan’s 10-year JGB yield briefly hit 3.015% this week: The highest since 1996, up roughly one percentage point since March. Currency diplomat Mimura kept intervention rhetoric alive: Saying he’s “neither satisfied nor reassured,” though traders still attribute Yen strength to BoJ tightening expectations, not intervention. Brent climbed to a six-week high around $97.62: As the oil narrative shifts from immediate escalation questions to concern the conflict could extend into 2027. Reuters reported officials see possible intensified attacks after the US midterms: Underscoring no clear near-term exit from a conflict now in its seventh month. Dollar is broadly weaker despite a combination that would normally support it: Brent above $97 and extended conflict risk usually mean higher inflation and rates support for Dollar, but Japan has taken control of the FX narrative instead. Unlike July, today’s approach to 155 is organic: No confirmed official Yen buying, unlike July’s roughly $96.5bn intervention with rare US participation. What to Watch Next Friday’s US nonfarm payrolls report is the decisive near-term test for Dollar, following a softer ADP print and in-line jobless claims. Watch whether USD/JPY breaks below 155, further signals on GPIF’s portfolio review, and whether Brent extends toward $100 as Capital Economics and others push their Middle East normalization timelines further into 2027.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
USD/JPY has tumbled to 156.04, but JPMorgan's 164 year-end target survives because the pair remains inside its 155-165 central range. The US Dollar to Japanese Yen (USD/JPY) exchange rate has slumped to around 156.04 after a sudden Yen surge wiped more than four Yen from the pair in less than 48 hours.
The latest USD/JPY rate was down 1.81% on the day and 2.56% across 48 hours, trading only fractionally above the period's 156.00 low.
USD/JPY 48-Hour Price Chart
Image: USD/JPY 48h chart The fall looks severe on the short-term chart, but USD/JPY has not yet broken the range behind JPMorgan's year-end forecast.
JPMorgan expects the BoJ to raise rates roughly once per quarter, while assuming no substantial change in market expectations for Federal Reserve policy.
"If the BOJ continues to hike at roughly a quarterly pace while Fed hike expectations do not change materially, we think USD/JPY is likely to remain within the 155–165 range for the time being. This is our base case, and we maintain our USD/JPY targets of 160 at end-September and 164 at end-December."
At 156.04, USD/JPY is 1.04 Yen above the bottom of that range, while reaching 160 and 164 would require rebounds of approximately 2.5% and 5.1%, respectively.
JPMorgan said the OIS-implied probability of a September BoJ increase had already risen from 28% before the end-July intervention to 92%.
The latest surge therefore brings the market closer to the policy assumptions behind its central scenario rather than directly invalidating the 164 target.
USD/JPY Three-Month Chart
Image: USD to JPY rate three-month graph The three-month chart places USD/JPY much closer to its 155.27 low than July's 163.98 peak, with the pair also trading below its 20-day and 50-day moving averages.
Fed Pause Scenario Points to 157 JPMorgan's alternative scenario, in which the Fed pauses its rate increases, produces a lower USD/JPY range of 153-163.
"Based on the correlation between the 1y1y spread and USD/JPY observed at that time, the fair value of USD/JPY under a Fed pause scenario is around 157."
The current rate is already slightly below that estimate, although it remains inside the scenario range and near the 156-160 band discussed in our earlier Japanese Yen forecast.
JPMorgan accepts that an overshoot could temporarily push USD/JPY below 155, but adds: "In this scenario, however, we view the likelihood of a sharp yen appreciation—such as a move below 150—as low."
Near-Term US$/JPY Forecast: What Would Break the Range? A sustained move below 155 would require a stronger catalyst, with JPMorgan identifying Fed rate-cut expectations, an accelerated BoJ cycle that damages Japanese equities, a GPIF portfolio change or heavier official Yen buying.
Slower-than-priced BoJ tightening, stronger Fed hike expectations or renewed Japanese fiscal concerns could instead drive USD/JPY above 165.
US payrolls and the September Fed and BoJ decisions will now determine whether 156 becomes the starting point for a rebound or the first step towards JPMorgan's lower 153 boundary.
USD/JPY klesl pod 200denní klouzavý průměr a za poslední dva dny oslabil o 0,91 % a 1,35 %. Tím se zhoršil jeho býčí trend a roste riziko dalšího poklesu.
Key takeaways JPY strength accelerates: USD/JPY fell 0.91% on 2 September and extended its decline by another 1.35% on 3 September, a move comparable with the sharp decline seen around the July US-Japan FX intervention.Fundamentals are turning more yen-supportive: US Treasury Secretary Scott Bessent’s support for decisive Japanese action, BoJ policymaker Hajime Takata’s discussion of larger or consecutive rate hikes, and renewed intervention risk have strengthened the bullish JPY narrative.200-day MA breakdown damages USD/JPY’s uptrend: The pair has broken below its 200-day MA and erased its gains since the 3 August low. Unless 158.04/50 is reclaimed, downside risk remains towards 155.03 and 153.84. In the past 40 hours, the Japanese yen has strengthened dramatically against the US dollar, a trend that began on Wednesday, 2 September 2026, when USD/JPY declined by 0.91%.
In follow-through today (Wednesday, 3 September 2026), USD/JPY has extended its losses by a further 1.35% at the time of writing (see Fig. 1).
The current decline of the USD/JPY is almost on par with the daily loss of 1.32% recorded on 31 July 2026, where Japan and the US confirmed their first joint FX intervention in around 28 years following the Japanese government’s sole intervention a day earlier on 30 July 2026, in bid to stall the steep pace of JPY weakening where USD/JPY soared to the 164 handle on 23 July 2026, its highest level in about 40 years.
Fig. 1: Daily rate of change (%) of USD/JPY with key events as of 3 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance. Today’s swift decline in USD/JPY smells like FX intervention, with no clear catalyst in relevant economic data releases.
However, so far, there are no official press releases from Japan or the US confirming any form of intervention, and no “according to sources” reporting from media outlets.
What we know so far… Here are the three fundamental developments to reinforce the current bout of JPY strength:
US Treasury Secretary Scott Bessent expressed support for decisive Japanese action to address yen weakness to Bank of Japan (BoJ) Governor Ueda during the G-20 finance and central bank leaders meeting last weekend, according to a readout released by the US Treasury Department on Tuesday, 1 September 2026. This reduces the political constraint on further BoJ tightening and suggests Washington is increasingly comfortable with a stronger yen.BOJ board member Hajime Takata said policymakers should consider options beyond the conventional 25-basis-point rate increase, including larger or consecutive hikes, said in a news conference on Wednesday, 2 September 2026. While Takata remains one of the BoJ’s most hawkish members, his comments increase the risk that the central bank accelerates its tightening cycle.The speed of the yen’s appreciation placed traders on high alert for another round of intervention. Although there was no immediate confirmation of official yen buying, the threat of action creates an increasingly asymmetric risk around the psychologically important 160.00 region.Let’s now unpack the short-term trajectory (1 to 3 days) of the USD/JPY from a technical analysis perspective.
Major uptrend phase of USD/JPY has been damaged, bounce before a new drop Fig. 2: USD/JPY medium-term trend as of 3 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance. Fig. 3: USD/JPY minor trend as of 3 Sep 2026 (Source: TradingView). The information presented is historical information, and past performance is not indicative of future performance. Today’s swift bearish reaction in USD/JPY comes right after the retest of a key pullback resistance level at around 160.30, a former major ascending trendline support from the 22 April 2025 low (see Fig. 2).
Today’s decline in USD/JPY has sent it below the key 200-day moving average and erased all its gains from the prior one month, since the 3 August 2026 low of 155.23 (see Fig. 2).
The current steep intraday decline in USD/JPY has pushed the hourly RSI momentum indicator into oversold territory, but there is no clear bullish divergence at this juncture (see Fig. 3).
Hence, USD/JPY may now form a potential minor dead cat bounce at the near-term support of 156.32, towards the near-term resistance of 157.30.
Watch the 158.04/50 key short-term pivotal resistance (also the 200-day moving average). If this zone is not surpassed to the upside, the odds are skewed towards a new potential bearish impulsive down-move sequence next, which could expose the next intermediate supports at 155.03 and 153.84 in the first step (see Fig. 3).
On the other hand, a clearance and an hourly close above 158.50 would invalidate the bearish scenario, triggering a squeeze up to retest the next intermediate resistance at 159.18/54 (20-day moving average) (see Fig. 3).
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.
Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.
In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.
Based in Singapore, Kelvin Wong is a well-established senior global macro strategist with over 15 years of experience trading and providing market research on foreign exchange, stock markets, and commodities.
Passionate about connecting the dots in the financial markets and sharing perspectives around trading and investment, Kelvin Wong is an expert in using a unique combination of fundamental and technical analyses, specializing in Elliott Wave and fund flow positioning, to pinpoint key reversal levels in the financial markets.
In addition, over the last ten years, Kelvin has conducted numerous market outlook and trading-related seminars, as well as technical analysis training courses, for thousands of retail traders.
USD/JPY klesl z 160,38 pod 158, trh ale spíš zaceňuje obavy z další intervence než potvrzený zásah. Před pátečním NFP je obraz asymetrický: slabá data otevírají cestu k 155, silná mohou měnový pár zvednout zpět k 160.
TL;DR: USD/JPY has tumbled from 160.38 through 158, not because of actual intervention but because fear of a repeat is shaping trader psychology near 160 — a fear reinforced by rapidly repricing BoJ tightening expectations, setting up an asymmetric test for Friday’s NFP.
Not Intervention, but July Changed the Risk Calculus USD/JPY has fallen sharply from 160.38 yesterday, and the selloff extends through 158 today. But latest move bears little resemblance to confirmed intervention seen at end of July. That operation drove pair almost vertically from 163.97 to 155.22, a drop of roughly 8.75 Yen, or more than 5%, as Japan intervened with US participation. By comparison, latest decline has been much smaller, more orderly and spread over hours rather than minutes.
There is therefore little in price action itself to suggest authorities have stepped back into market. But July intervention still matters because it changed how traders behave when USD/JPY approaches 160. With pair again testing familiar territory ahead of another US payroll report, market is facing a pre-NFP repeat in positioning psychology, even without a repeat of official action.
That leaves an important distinction: intervention is not driving USD/JPY lower directly, but fear of intervention is shaping risk-reward around 160. Traders carrying short-Yen positions now have recent evidence that official action can produce a sudden multi-Yen reversal. That makes position reduction more likely before authorities actually intervene.
Intervention Fear Explains Timing; BoJ Repricing Explains Durability Intervention anxiety alone would make latest move vulnerable to reversal. What gives Yen strength a more durable foundation is rapid repricing of BoJ tightening path.
Markets are no longer simply debating whether BoJ raises rates at September 17–18 meeting. OIS pricing points to roughly 96.5bp of cumulative tightening over the coming 12 months, close to four quarter-point hikes. September itself is priced at around an 84% probability, but more important development is how much additional tightening is being built beyond that meeting.
BoJ board member Hajime Takata reinforced that shift in his Wednesday speech in Sapporo. He described “2026 [as] a regime change” in monetary policy, argued rate hikes should become “nimble and data-dependent,” and said BoJ should not be “bound by particular intervals or ranges anticipated in the markets.”
That directly challenges old assumption of roughly semiannual tightening. If BoJ is moving from two carefully spaced hikes a year toward a genuinely data-dependent cycle, Yen becomes less attractive as a cheap and predictable funding currency.
Washington Is Reinforcing, Not Creating, the BoJ Story US pressure adds another layer. Treasury Secretary Scott Bessent has repeatedly encouraged Japan to normalize policy, while reports following his G20 meetings with Japanese officials said he argued that Japan’s next step should be higher rates.
That matters because Washington and Tokyo increasingly appear aligned on the direction of adjustment: less Yen weakness and tighter Japanese monetary conditions. It also reduces market confidence that renewed USD/JPY gains well through 160 would be passively tolerated.
Still, BoJ tightening case should not be reduced to US pressure. Takata’s argument is domestic: Japan’s inflation regime has changed, price stability target is close to being achieved, and policy should increasingly guard against an inflation overshoot. Bessent amplifies that backdrop; he does not create it.
The distinction reinforces central thesis. Intervention fear explains why traders are nervous near 160. BoJ repricing explains why buying back Yen can continue even without intervention.
ActionForex’s Technical View on USD/JPY Technical picture has deteriorated quickly. USD/JPY’s decline from 160.38 has now extended through 157.99 support, confirming that the rebound from 155.22 has completed as a three-wave corrective move. Immediate focus is now on 61.8% retracement of 155.22 to 160.38 at 157.19.
Firm break of 157.19 will pave the way toward the 154.76–155.01 medium-term support zone, which includes the 38.2% retracement of 139.87 to 163.97 at 154.76. The recent 155.22 intervention low sits just above that area.
Momentum is already stretched. 4H RSI has dropped into deeply oversold territory around low-20s, while MACD has turned sharply lower. That creates room for a near-term bounce, but an oversold rebound would not repair technical damage by itself. On upside, 159.00 is first minor resistance. A break there would stabilize near-term picture and reopen 160. But that is where technical recovery runs into a much less measurable obstacle: intervention risk.
NFP Makes the Setup Asymmetric Friday’s US payroll report is therefore unusually important.
Current Fed pricing still favors another September hike, but softer ADP employment has reminded markets that labor data remain one of clearest ways to challenge hawkish path. A weak NFP would attack USD/JPY through US side of rate differential: Treasury yields could fall, Fed hike expectations could ease and the break of 157.99 could extend toward 157.19.
That creates a relatively clean downside sequence: 157.19 → 154.76–155.22 support zone
There is no equivalent policy barrier preventing Yen from strengthening through those levels.
A strong NFP creates a different setup. It would likely support US yields, and allow USD/JPY to recover through 159.00 toward 160. But a move materially above 160 must overcome two additional hurdles that did not exist in same form earlier this year: fresh intervention memory and a much more aggressive BoJ tightening path.
That does not make 160 an official ceiling. It does mean upside becomes progressively harder to price with conviction.
Strong Payrolls Need to Do More Than Save September This is where NFP asymmetry becomes clearest.
A merely solid jobs report may be enough to preserve September Fed hike expectations. But that may only produce another test of 160.
For USD/JPY to establish a more durable move higher, NFP probably needs to push markets toward a more aggressive Fed path beyond September, not just validate one hike already substantially priced. In other words, US rates would need to become more hawkish faster than Japanese rates are being repriced.
By contrast, a weak NFP does not face that higher threshold. It would simultaneously reduce US rate support, reinforce Fed-BoJ convergence and encourage more short-Yen covering.
That leaves USD/JPY with an asymmetric pre-NFP setup. Weak jobs have a relatively unobstructed route toward 155 levels. Strong jobs can drive a rebound, but a convincing break above 160 must overcome both intervention risk and a BoJ tightening cycle that markets increasingly expect to accelerate.
Key Takeaways USD/JPY’s fall from 160.38 toward 158 is far more orderly than July’s confirmed intervention, suggesting fear of a repeat, not actual official action, is driving the move. OIS pricing points to roughly 96.5bp of cumulative BoJ tightening over the next 12 months, with September priced at an 84% probability but more tightening expected beyond it. BoJ’s Takata described 2026 as a “regime change” toward nimble, data-dependent hikes, directly challenging the old assumption of roughly semiannual BoJ moves. A weak NFP has a relatively clear path toward the 154.76-155.22 support zone, while a strong NFP faces two extra hurdles above 160: intervention memory and accelerating BoJ tightening. 157.19 is the key near-term level; a break opens the 154.76-155.01 zone, while 159.00 is the first resistance on any oversold bounce.
ActionForex
ActionForex.com was set up back in 2004 with the aim to provide insightful analysis to forex traders, serving the trading community for two decades. We started providing only a daily and a mid-day report, now known as Action Insights. Gradually, we added a lot more in-house contents to the site. Technical Outlook section was expanded to cover more pairs. In addition to that, Top Movers, Heat Map, Pivot Point Charts and Pivot Meters, Action Bias and Volatility Charts, are tools used by traders from all over the world.
USD/JPY za poslední dvě obchodní seance klesl téměř o 1 % a jen posiluje díky rostoucím očekáváním, že BoJ zrychlí tempo zvyšování sazeb. Trh nyní dává více než 80% šanci na alespoň 0,25% zvýšení na příštím zasedání.
A significant shift has begun to emerge around the strength of the Japanese yen in the short term. Over the last two trading sessions, USD/JPY has declined by nearly 1.00%, reflecting a notable recovery in the Japanese currency. For now, this selling pressure is primarily being driven by growing expectations that the Bank of Japan could accelerate the pace of interest rate hikes. As long as these expectations continue gaining traction in the market, it is possible that downside pressure on USD/JPY remains relevant during the coming sessions.
Is the Bank of Japan Turning More Aggressive?
Expectations surrounding the Bank of Japan have changed considerably in recent weeks. This shift has been largely driven by increasing expectations of a rate hike at the September meeting following recent comments from Kazuo Ueda, who emphasized that inflation is once again moving closer to the bank's 2.00% target.
In addition, several policymakers have suggested that not only could a rate hike be justified in September, but that further adjustments may also be necessary in the months ahead. As a result, markets are currently assigning more than an 80% probability to at least a 0.25% rate increase at the next meeting.
This development comes as a relative surprise because Japan still maintains one of the lowest interest rates among major central banks, currently around 1.00%. Until recently, the dominant view was that the Bank of Japan would remain focused on maintaining monetary stability. However, the latest narrative suggests the institution could become one of the more aggressive central banks over the coming months.
Over the longer term, this shift could also improve the relative attractiveness of yen-denominated assets compared with international alternatives, a dynamic that has been largely absent during the years of ultra-low interest rates in Japan.
This change is already being reflected in the Japanese bond market. 10-year government bond yields have shown a consistent recovery following recent comments and now trade above the 3.00% level, helping strengthen the appeal of yen-denominated investments.
However, it is important to note that this is occurring alongside rising U.S. Treasury yields, which have already climbed above 4.8%. As a result, while Japanese bonds are becoming more attractive, U.S. yields continue to provide a favorable differential for the dollar that could limit part of the yen's recent advance.
Source: TradingEconomics
It is also noteworthy that the yen's recovery is taking place despite the relative stability of the U.S. dollar. The DXY Index, which measures the dollar's performance against its major peers, continues to trade near the 100-point area without showing any meaningful loss of momentum.
This suggests that markets are placing significant importance on recent comments from the Bank of Japan and that, for now, expectations of a more restrictive monetary policy in Japan are having a greater impact than the stability currently observed in the dollar. Nevertheless, it remains important to consider that a stronger recovery in the U.S. currency could continue to limit part of the yen's recent gains.
Source: TradingEconomics
Taking all of this into account, it appears that the Bank of Japan's shift in tone has been enough to support a recovery in the Japanese currency over the short term. This dynamic could continue to favor downside pressure on USD/JPY as long as the dollar and U.S. bond yields do not accelerate their recovery more aggressively.
At the same time, it is important to recognize that a more hawkish stance from the Federal Reserve could once again increase the appeal of dollar-denominated assets. Under that scenario, part of the yen's recent strength could begin to moderate and the market could return to a more balanced phase around USD/JPY.
USD/JPY Technical Outlook
Source: StoneX, Tradingview
Lack of Direction Remains Relevant: After USD/JPY moved away from the major bullish trendline that dominated much of the price action over recent months, the market entered a more balanced phase. Despite the recent strengthening of the yen, a sufficiently strong directional structure has yet to emerge on the chart. Unless price manages to break through important technical levels, this lack of direction may continue to dominate and could even open the door to a more defined period of range-bound trading.
RSI: The RSI remains slightly below the neutral 50 level. However, this behavior does not yet indicate aggressive selling pressure. Instead, it continues to reflect a relatively balanced environment between buyers and sellers over the last fourteen sessions. This reading supports the possibility that a period of indecision remains relevant for price action.
MACD: A similar picture can be observed in the MACD, where the histogram continues to fluctuate around the neutral 0 line. This behavior reflects balance in the average strength of short-term moving averages and reinforces the possibility that a neutral market environment remains an important feature of the chart in the coming sessions.
Key Levels to Watch:
160.889 – Key Resistance: This level coincides with the most relevant 61.8% Fibonacci retracement on the chart as well as the 50-period moving average. Price action that manages to establish itself above this area could favor the emergence of a stronger bullish bias and restore the relevance of the previous bullish structure that dominated months ago.
159.676 – Nearby Barrier: This level represents one of the main equilibrium zones on the chart and aligns with several important retracement areas from previous sessions. It could become the key reference to monitor should bullish corrective moves begin to emerge in the short term.
157.280 – Key Support: This area corresponds to recent lows and also aligns with the 200-period Simple Moving Average and the 23.6% Fibonacci retracement of the most relevant move on the chart. A sustained break below this level could reinforce a more dominant bearish bias and potentially pave the way for a broader downtrend over the coming weeks.
Written by Julian Pineda, CFA, CMT – Market Analyst
Volatilita USD/JPY prudce vzrostla poté, co komentáře člena Bank of Japan Hajimeho Takaty znovu otevřely sázky na další zvýšení sazeb. Trh teď sleduje také ISM služeb a payrolls, které mohou změnit očekávání pro Fed.
USD/JPY volatility has returned to the spotlight after a sharp yen move late in the Asian session initially raised questions over whether Japanese authorities had stepped back into the market.
The move followed comments from Bank of Japan policymaker Hajime Takata, who argued for a more nimble approach to adjusting interest rates as policymakers respond to inflation. That potentially increases the importance of each BOJ meeting and puts the path for Japanese rates firmly back into focus.
USD/JPY Faces BOJ and US Data Risk The latest move comes at an important point for USD/JPY. Volatility has increased, trading volume has picked up and price is approaching an area where the reaction could provide useful clues about the next directional move.
But traders also have a significant US data hurdle ahead. ISM services and nonfarm payrolls could materially shift expectations for the Federal Reserve and therefore the US-Japan rate differential that remains central to USD/JPY.
In the video, I look at the latest price action, the levels that could matter from here and whether the sudden increase in yen volatility should be treated as the start of something larger or simply another short-term move.
I also examine USD/JPY behaviour around previous NFP reports and what futures positioning tells us about speculative exposure to the Japanese yen.
Watch the video for the full USD/JPY analysis, NFP volatility study and yen positioning outlook.
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Westpac analysts expect USD/JPY to test 162 in September before retreating to 154 by end-2027 and 146 by the end of 2028. The US Dollar to Japanese Yen (USD/JPY) exchange rate slipped to 159.6004 on Wednesday, leaving Westpac's September forecast target of 162 around 1.5% above spot.
USD/JPY had climbed as high as 160.3872 during the previous 48 hours before reversing sharply, while the daily decline reached 0.37%.
Image: USD/JPY 48h chart The chart above shows the pair giving back its advance through 160.30 and finishing near the bottom of its 159.4938-160.3872 range.
Westpac's September call is effectively for one more test higher rather than an unprecedented breakout.
The pair traded as high as 163.9798 in July, so 162 has already proved reachable this summer.
What follows in Westpac's forecast curve is far more interesting.
The bank sees USD/JPY easing to 160 in December and remaining there in March 2027, before falling to 158 in June, 156 in September and 154 at the end of next year.
The decline then continues at a remarkably steady pace: 152 in March 2028, 150 in June, 148 in September and 146 in December.
From the forecast peak of 162 to the final 146 target, that would be a 9.9% fall in USD/JPY and an appreciation of almost 11% for the Yen against the Dollar.
The Yen recovery is not built on aggressive Fed cuts Westpac's accompanying interest-rate forecasts make the currency path more striking.
The bank keeps the Federal Funds rate at 3.625% throughout the forecast period, rather than relying on a sizeable US easing cycle to pull USD/JPY lower.
It also expects the US 10-year Treasury yield to ease only modestly, from 4.65% in September to 4.55% in the first half of 2027.
The yield then rises gradually to 4.85% by December 2028, precisely when USD/JPY reaches 146.
In other words, Westpac is forecasting a major Yen recovery without a lasting collapse in US yields.
The published figures do not include a separate Japanese interest-rate path or written explanation for the move, so it would be wrong to assign the decline to one specific catalyst.
Still, the curve fits a market increasingly focused on whether Japanese policy can take over from direct currency support.
As we noted in our recent Yen analysis, intervention can deliver an abrupt move but has struggled to overcome the interest-rate gap for long.
Westpac's numbers instead describe a slow adjustment lasting more than two years.
These are dated forecast points rather than promised trading stops, but the message is unusually clear: 162 may come first, while the bigger move is eventually lower.
Friday's Japanese household-spending figures and US employment report provide the next test, with Westpac forecasting a 70,000 rise in payrolls against a market estimate of 55,000.
USDJPY poprvé za měsíc otestoval hranici 160, protože jestřábí rétorika Kevina Warsha podpořila dolar. Trh zároveň zvýšil pravděpodobnost zářijového zvýšení sazeb Fedu z 38 % na 60 %.
USDJPY tested the 160 mark for the first time in a month. Kevin Warsh’s ‘hawkish’ rhetoric provided support for the US dollar. The US dollar reacted enthusiastically to Kevin Warsh’s ‘hawkish’ rhetoric, strengthening against the world’s major currencies. The recent slowdown in inflation did not mislead the Fed Chair. He considers the current monetary policy to be insufficiently restrictive and maintains that the central bank still has a lot of work to do. Such rhetoric led to a rise in Treasury bond yields, put the brakes on stock indices and gave the greenback a boost.
The futures market has raised the probability of a Fed rate hike in September from 38% to 60%. CME derivatives put the probability of two federal funds rate hikes in 2026 at 49%. Prior to Kevin Warsh’s speech at Jackson Hole, the figure stood at 21%.
The escalation of the conflict in the Middle East is adding fuel to the fire of rising economic indicators. For the first time since 29 July, the US resorted to bombing Iran, to which Tehran responded with attacks on American bases in Jordan. As a result, Brent crude has risen back above $90 per barrel, heightening the risk of accelerating inflation and prompting the Federal Reserve to tighten monetary policy.
The strengthening of the US dollar enabled the ‘bulls’ on USDJPY to push the exchange rate above the critical 160 mark. It did not manage to hold that level on the first attempt. However, the fact that speculators have been building up short positions on the yen for the second week running suggests that further ones will follow this initial attempt. The pair recouped half of its losses due to currency intervention, which totalled a record $98.7 billion.
Scott Bessent was forced to explain to Congress Washington’s involvement in the coordinated intervention in the forex market. According to the Treasury Secretary, Japan is the largest holder of Treasuries, and erratic movements in the yen could destabilise financial markets and increase the cost of borrowing in the US.
Scott Bessent has no intention of telling the Bank of Japan what to do. However, the Bank must have a clear understanding of the situation. Japan has reached the end of Abenomics, which was essentially a reflationary programme. This is a clear hint at the need to raise the overnight rate at the BoJ’s next meeting in September. The futures market puts the probability of monetary policy tightening at over 80%. Without this, currency interventions make no sense.
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USD/JPY se drží kolem 159,53, zatímco jen zůstává v úzkém pásmu a odevzdal zhruba polovinu zisků po konci červencové intervence. Trh zároveň více započítává zářijové zvýšení sazeb BoJ.
USD/JPY held around 159.53, with the Japanese yen trading sideways for more than a week. The currency has lost approximately half of the gains made following the joint intervention by Tokyo and Washington at the end of July.
Pressure on the yen persists due to a wide interest rate differential, rising fiscal risks, and elevated energy and import costs.
At the same time, markets are increasingly pricing in a Bank of Japan rate hike in September to support the yen and contain inflation. The yield on 10-year Japanese government bonds climbed to 30-year highs this week, reflecting expectations of near-term policy tightening and concerns over the state of public finances.
Core machinery orders rose 9.7% in June, significantly exceeding forecasts and providing further support for expectations of tighter policy while signalling robust business capital expenditure.
Technical Analysis
On the H4 USD/JPY chart, the market is forming a consolidation range around the 159.49 level, currently extending down to 159.20. A move higher to 159.49 is expected today, followed by a decline to 159.00. A break below this level would open the way for a correction towards 158.54. The MACD indicator supports this scenario, with its signal line above zero and trending downward.
On the H1 chart, USD/JPY has moved up to 159.65. A consolidation range is currently forming below this level. A downside breakout would open the way for a move lower to at least 159.00. The Stochastic oscillator confirms this scenario, with its signal line below 50 and trending downward towards 20, indicating short-term downside pressure.
Conclusion USD/JPY remains range-bound as the yen struggles to sustain gains from the late-July intervention. The currency has given back roughly half of its post-intervention appreciation, weighed down by persistent fundamental headwinds. However, markets are increasingly pricing in a September rate hike from the Bank of Japan, supported by rising bond yields and stronger-than-expected machinery orders data. Technically, the pair may see a short-term pullback towards 159.00 and potentially 158.54 before its next directional move. The yen’s outlook will depend on Bank of Japan policy signals, US economic data, and the trajectory of energy prices.
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The Japanese yen continued its recent retreat, reaching its lowest level since July 31 as the recent US intervention backfired. The USD/JPY pair rose to 159.43, up by 2.72% from its lowest level this month.
The USD/JPY pair crashed hard earlier this month, reaching its lowest level since May, after the Donald Trump administration made its biggest intervention in years. It did that by converting some of its euro holdings into the Japanese yen, a move that caught European officials offguard.
The Bank of Japan (BoJ) also intervened, pumping billions of dollars to yen buying. This happened after the pair jumped to 163.96, its highest level in decades.
The Trymp administration intervened to prevent the BoJ from intensifying its US government bond sales, which would have driven yields higher. Already, the 30-year yield has remained above 5% for months. And this week, the US government sold ten-year bonds at the highest yield in years.
Historically, forex market interventions tend to have a short-term impact on the currency. A good example of this is how the Japanese yen jumped on April 30th after the BoJ intervened and then resumed its downward trend.
The main issue facing the Japanese yen is that the Bank of Japan maintains low interest rates compared to the Federal Reserve. It recently hiked rates to 1%, the highest level in decades. This rate, however, is much lower than the US, which has remained between 3.50% and 3.75% this year.
The implication of this is that the USD/JPY has become a carry top carry trade pair. A carry trade is a situation where investors borrow from a low interest country and invests in a high interest rate one. In this case, they are borrowing from Japan and investing in the US.
As such, analysts believe that the Japanese yen will only have a sustained uptrend against the US when the BoJ hikes interest rates further. The BoJ has hinted that it may hike rates further this year. A Polymarket poll shows that odds of a 25 basis point hike in September have jumped to 68%.
Separately, the USD/JPY pair reacted mildly to the latest US nonfarm payrolls and consumer inflation data. The jobs report showed that the US economy lost 23k jobs in July, while the unemployment rate dropped to 4.2%. Another report released on Wednesday showed that the US inflation softened a bit in July. These numbers mean that the Fed will maintain rates unchanged this year.
USDJPY chart | Source: TradingView
The daily chart shows that the USD to JPY pair has rebounded in the past two weeks as the impact of the intervention fades. It has now jumped to 159.46, and is attempting to cross the 25-day Exponential Moving Average (EMA).
The Average Directional Index (ADX) has continued rising and moved to 37, the highest level in months, a sign that the uptrend is continuing. Therefore, the path of the least resistance for the pair is bullish, with the next key target to watch being 160. A move above that level will point to more upside.
The only caveat to remember is that the BoJ and the US have hinted at possible interventions, meaning that these gains can easily reverse.
USD/JPY zůstává citlivý na americký CPI, protože právě tato data v minulosti několikrát spustila prudké obraty. Trh nyní čeká na zítřejší inflaci z USA, která může znovu změnit očekávání sazeb Fedu.
USD, USD/JPY Talking Points: The long-term USD/JPY carry trade is still swinging USD trends across the FX market. At root of the USD/JPY trade are rate expectations and as high US CPI forced expectations higher over the past two months, USD/JPY bulls drove a rally that eventually brought out coordinated intervention. Over the past four years some of the largest moves in USD/JPY have been sparked by US CPI rather than interventions and that puts even more interest behind tomorrow’s release.
The Bank of Japan and the US Treasury Department took their swing at USD/JPY two weeks ago, but since then, bulls have been clawing back. This puts perhaps even more importance on tomorrow’s US CPI report as rates markets still widely-expect the US to lift rates later this year, with an approximate 80% probability priced-in for at least one 25 bp hike.
Even September is looking like a coin flip, and that’s largely owed to the spike in CPI seen earlier this summer on the back of the war in Iran. As oil prices rallied, inflation followed, and there’s been a growing chorus of Fed-speakers that sound as though they’re warming to the idea of tightening policy, looking to avoid a repeat of the disaster in 2021 that saw the FOMC dismiss inflation as ‘transitory’ until, eventually, they had no choice but to hike aggressively in 2022.
US CPI Prints Since Jan 2021
Chart prepared by James Stanley
Rates Markets Right now rates markets are highly expecting a rate hike from the Fed later this year, which would fly in the face of President Trump’s strategy in which he wanted to install a Fed Chair that would cut rates. So far, Warsh has sounded more hawkish than dovish but as I shared after the last FOMC meeting, it seems as though he’s doing that to keep markets from just expecting that he’s going to cut rates whenever he can. If they did think that Warsh was a dove, that could give upward momentum to US Treasury Yields, such as we’ve seen, and that could complicate the picture for the US Treasury Department that has a considerable amount of debt coming due over the next four months and then more over the next year.
This is likely why he keeps saying that the market will adjust rates based on the preponderance of data rather than waiting for the Fed to do so. Nonetheless, that expectation still leans towards wide expectations for the Fed to hike, and this comes with numerous market responses such as a stronger USD, a stronger USD/JPY, etc. And if we do see those rate hike odds price out, then, reasonably, there could be a shift in price action for those markets, as well.
At this stage hike in September is a veritable coin flip.
CME Fedwatch Odds for September Chart prepared by James Stanley; data derived from CME Fedwatch US CPI is Important for USD/JPY, Which is Important for the USD and FX Market Some of the largest moves in USD/JPY over the past four years have been fueled by a US CPI release.
In October of 2022, when the Fed was hiking aggressively to tame the ‘transitory’ inflation that turned out to be not so transitory, USD/JPY was in a near-parabolic like state. To the point where Japanese officials were beginning to worry about the possibility of hyperinflation. So, they tried to step in at 145 and that largely failed, as the intervention merely prodded a pullback that USD/JPY bulls bid, eventually driving price up to 150.00.
At that point, the BoJ was forced to act, after a high of 151.95 traded. They intervened on a Friday ahead of the weekend and, again, price retreated to support before buyers piled back in.
But this time, as price re-approached that 150.00 handle that was previously defended, bulls began to back away. They still held and even bought at support, but as bounced showed up they came in with lower-highs.
What ultimately drove a reversal was the US CPI print on the morning of November 10th, 2022. That was when markets got warm to the idea that perhaps the Fed was getting a handle on inflation, and maybe they would soon be able to stop hiking and, perhaps even eventually cut rates. US CPI was 7.1% at the time and core was at 6.3% so this was still a distant prospect – but the possibility of change was enough to convince longs to bail on positions given that the theoretical cap on upside at the time, at 150.00 made chasing prices higher a less attractive setup.
That market reversed by about 2,000 pips over the course of around two months, with bulls ultimately getting back in the driver seat in January. They, again, drove right back to the same 151.95 level. And, again, it was a below-expected US CPI print in November that shook the branch of the carry trade. This time, it was a mere 23.6% retracement of that prior rally with bulls getting control in December and going right back up to the same 151.95 spot.
In April of 2024, hope was beginning to fade on rate cuts and on April 10th, the morning of a US CPI print, above expected data dashed rate cut hopes – and this time, USD/JPY broke out as the stops above 151.95 provided rocket fuel for longs, and the pair made a firm run up to the next big figure at 160.00.
The Bank of Japan, again, intervened, and that brought about a week of weakness to USD/JPY but that same 151.95 level provided a launch pad for bulls to get back in the driver seat, with price trickling back-above 160.00 shortly after.
The next intervention, in July of 2024, saw the BoJ take a different approach. This time, they waited until the morning of a US CPI print and the combination of the two forces, with inflation coming in below expectations and markets finally getting the confirmation they needed that the Fed could probably cut rates that year, sparked a dizzying reversal – and not just in USD/JPY, as the high-flying AI trade came under fire, as well.
USD/JPY Daily Chart Chart prepared by James Stanley; data derived from Tradingview Why USD/JPY is So Sensitive to US CPI The carry trade is driven by rate differentials, and those are largely driven by inflation. With central banks tasked with monitoring inflation, drops that lead to lower rate expectations or even just fewer rate hikes could be enough to compel longs to close positions, such as we saw in November of 2022 or 2023, or again in July of 2024.
And because the USD/JPY trade is still up more than 50% from early 2021 levels, then logically there’s a large built-in position on the long side of the pair, which means selling in USD/JPY can lead to USD-weakness elsewhere, such as we saw with the EUR/USD rally in Q3 of 2024, or even the bullish move in EUR/USD two weeks ago.
--- written by James Stanley, Senior Market Analyst, Global Macro
Friday’s US employment report was the first of four major pieces of economic data due before the Federal Reserve’s September meeting. The figures delivered a significant downside surprise, prompting markets to scale back expectations of a September rate hike to around 44%, from above 55% ahead of the release. Yet, the data hasn’t materially changed the USD/JPY forecast much. The pair has already recovered towards the levels seen before the payrolls release, trading close to 159.00. That leaves the pair once again within striking distance of the psychologically important 160.00 level. Unless upcoming US data deliver further negative surprises, or Japanese authorities step back into the market, USD/JPY could once again test that threshold.
The next major catalyst is US inflation, with CPI due later this week. At the same time, developments in oil markets remain important, particularly as uncertainty surrounding the Strait of Hormuz continues to complicate the inflation outlook.
Oil remains a key variable for the dollar outlook Crude oil prices continue to find support from the uncertainty surrounding shipping through the Strait of Hormuz. Although Donald Trump has indicated that Washington is “semi-negotiating” with Iran, the language suggests that economic pressure remains central to the strategy rather than an immediate move towards military escalation.
There have also been reports that Iran and Oman are edging towards an understanding over a shipping route through the Strait. However, any meaningful and sustained reopening of the waterway is likely to depend on wider progress in US-Iran negotiations.
A prolonged disruption to energy flows should keep inflationary pressures elevated. That could make it harder for the Fed to ease policy, even if we see further data weakness, potentially providing an underlying source of support for the greenback.
The Fed’s data-dependent approach puts CPI in the spotlight The latest market reaction reinforces just how important incoming economic data have become for the dollar. Rather than relying heavily on oil prices alone, markets are increasingly being forced to assess individual data release through the Fed’s evolving reaction function.
That shift follows Federal Reserve Chair Kevin Warsh’s decision to move away from providing firm forward guidance. His recent messaging has left greater room for incoming data to reshape expectations around monetary policy.
There are still several important data points to come before the September 16 FOMC meeting: another payrolls report and two further CPI releases, including this week’s figures.
Inflation is particularly important because of Warsh’s admission that the Fed has consistently gotten it wrong and is looking to address it. As a result, any surprises in CPI or other inflation data like PPI could generate much larger moves in the dollar than we have seen from Friday’s jobs report alone.
This also helps explain why the weak payrolls figures did not trigger a sustained collapse in USD/JPY. Markets still have several opportunities to reassess the Fed outlook before September.
What is expected from CPI data? US CPI is now arguably the most important event on this week’s calendar. The previous CPI report had certainly surprised to the downside. Headline inflation slowed more sharply than expected to 3.5% from 4.2%, while core CPI eased to 2.6%. This time, economists expect moderate weakness. Headline CPI is expected to rise 0.1% month-on-month, taking the annual rate to 3.4%. Core CPI is forecast to increase 0.2% on the month, leaving annual core inflation at 2.5%.
The question now is whether we will see that moderation, and if so, whether it is enough to trigger further dovish repricing in US dollar. But as mentioned, alongside data it is also the developments in oil prices which will determine whether expectations for a tighter Fed are rebuilt or continue to unwind.
Why the yen is struggling to capitalise on softer US data In theory, the yen should be among the clearest beneficiaries of weaker US economic data because USD/JPY remains highly sensitive to the interest-rate differential between the two economies.
Yet the yen continues to face selling pressure, even following intervention episodes. The USD/JPY sold of sharply in late July as both the US and Japanese authorities jointly intervened in the foreign exchange market to support the yen. Such coordinated action is unusual and suggests that the US Treasury may be taking a more active role in attempts to stabilise the currency.
However, intervention alone is unlikely to deliver a durable change in the direction of USD/JPY. Foreign exchange intervention can disrupt positioning, reduce excessive volatility and alter market psychology. What it generally cannot do is permanently overturn a powerful macroeconomic trend.
Even growing expectations of a September Bank of Japan rate increase have so far struggled to generate a sustained reversal in the pair.
This is partly because the interest-rate gap with the US remains wide enough to keep carry-trade demand for the dollar alive.
Softer US data may improve the fundamental case for a stronger yen, but positioning and yield differentials can continue to work in the opposite direction – especially if oil prices remain elevated for longer.
USD/JPY forecast: 160 remains firmly on the radar Technically and fundamentally, USD/JPY remains caught between competing forces. The pair has already recovered to above 158.50, effectively returning to the area where it traded before Friday’s payrolls shock.
That recovery suggests the market has not yet fully embraced a sustained dovish repricing of the Federal Reserve. With the USD/JPY now also back above the 200-day average, the near-term path of least resistance is no longer to the downside.
Source: TradingView.com The path ahead is therefore likely to remain volatile. A return towards 160.00 remains a realistic possibility, particularly if US inflation proves sticky or oil prices remain elevated. 160.50 is the next obvious resistance followed by 162.00.
Meanwhile, if support around 158.00 area gives way and price moves below the 200-day again, then in the case, a return to 157.00 and possibly 156.00 will become likely. For that to happen, you’d feel US CPI will have to be quite weak this week.
Japonský jen třetí den v řadě posílil vůči USD a EUR po koordinované intervenci úřadů, když vůči dolaru zpevnil o téměř 5 % a vůči euru o 4,2 %. USDJPY a EURJPY zůstávají pod tlakem kvůli riziku dalšího zásahu, přičemž za týden jen přidal 3,9 % vůči dolaru a 3,1 % vůči euru.
USDJPY edged higher from new lowest level in almost three months, following three-day sharp fall on coordinated intervention by Japan’s authorities and US central bank, to support weakening yen.
Massive intervention buying lifted yen against US dollar (nearly 5%) and Euro (4.2%), with yen’s weekly gains of 3.9% vs dollar and 3.1% vs Euro.
The authorities signaled that further intervention cannot be ruled out that keeps near-term focus at the downside, with current (still mild) bounce, seen as positioning for fresh push lower for both currency pairs (USDJPY and EURJPY).
The USDJPY surged through daily Ichimoku cloud (spanned between 160.67 and 158.48), broke through 200DMA (157.92) and trendline support (157.10), while EURJPY broke 200DMA support (183.62), to hit the lowest since 17 Nov 2025 (179.36) on Monday.
Technical picture on daily chart turned bearish for both pairs, but stretched indicators after sharp fall suggest that bears may take a breather, though with limited upticks, due to persisting risk for possible further intervention.
USDJPY – broken 200DMA turned to solid resistance which capped today’s action and should ideally limit upticks, guarding next significant barrier at 158.48, provided by the base of thick daily cloud.
Fresh bears eye next pivotal supports at 155.02/154.78 (May 6 low / Fibo 38.2% of 139.88/163.98 rally) break of which to generate stronger reversal signal and support scenario of direction change of 16-month uptrend.
EURJPY- upticks should ideally hold below 182.50 zone (Fibo 38.2% of 187.43/179.36 post-intervention fall) to keep bears intact for firm break through cracked 180 psychological support and acceleration towards 175.28 (Fibo 38.2% of 154.79/187.94) and 172.70 (100WMA) in extension.
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USD/JPY klesl po vzácné koordinované intervenci USA a Japonska, které koupily jeny za účelem omezení prudkých pohybů. Pár se krátce propadl na 155,27 a pohyboval se kolem 156,63, což bylo o 0,52 % níže za den.
The United States joined Japan in buying yen to contain disorderly currency moves, protect the US Treasury market and prevent Japan’s financial strains spilling into the global economy. The Japanese Yen strengthened sharply on Monday after Japan confirmed that Washington had joined Tokyo in a rare coordinated intervention to support the currency.
Image: USD/JPY crashed as seen in the 24h chart Japan’s Ministry of Finance said it purchased yen alongside the US Treasury on Friday to counter “excessive volatility and disorderly movements” after the currency fell towards a 40-year low near ¥164 against the Dollar. Finance Minister Satsuki Katayama warned that the two countries would not hesitate to intervene again.
At the time of writing, the US Dollar to Yen exchange rate (USD/JPY) was trading around 156.63, down 0.52% on the day. The pair briefly plunged towards 155.27 overnight before recovering, extending its retreat from levels above 163 in late July.
Latest — Exchange Rates:
Dollar to Yen (USD/JPY): 156.62001 (-0.53%)
Euro to Dollar (EUR/USD): 1.153244 (+0.02%)
Pound to Dollar (GBP/USD): 1.347124 (-0.08%)
Washington’s involvement was not simply an act of support for a key Asian ally.
Japan had already spent heavily buying yen, with Bank of Japan data suggesting that Tokyo may have deployed almost $59 billion during Thursday’s intervention. Funding further action by selling US government bonds risked driving Treasury prices lower and pushing American borrowing costs higher.
The US intervention therefore helped address two risks at once: a destabilising collapse in the yen and the possibility that Japan could become a forced seller of Treasuries as it raised dollars to defend its currency.
The Federal Reserve’s FIMA repo facility could also allow Japan to obtain temporary dollar liquidity without selling its Treasury holdings outright.
US Treasury Secretary Scott Bessent described the facility as an important backstop and said Washington was prepared to participate in further coordinated action.
The move also supports the Trump administration’s trade agenda.
An exceptionally weak yen makes Japanese exports cheaper and can offset some of the competitive impact of US tariffs, while higher import costs are intensifying inflation and political pressure within Japan.
The intervention has forced traders to unwind large speculative bets against the yen, but officials may struggle to secure a lasting recovery without help from monetary policy.
The Bank of Japan kept its benchmark rate at 1.00% last week, although the coordinated action and increasingly forceful US pressure have strengthened expectations of another increase as soon as September.
Image: Dollar-Yen exchange rate performance over 2026 For USD/JPY, the immediate risk is now two-sided.
Further intervention could drive the pair back below 155.00, while a failure to follow the currency purchases with tighter Japanese policy could eventually allow the underlying US-Japan yield gap to reassert itself.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
BOJ zvažuje v září nebo říjnu zvýšení úrokové sazby na 1,25 %, což spolu s intervencemi proti jenu tlačí USDJPY dolů. Měnový pár za červenec oslabil zhruba o 3 % a uzavřel měsíc kolem 157,40.
Key Points:The BOJ may consider raising its policy rate to 1.25% in September or October.Yen intervention and expectations of higher Japanese rates are pressuring USDJPY.USDJPY could extend its correction if it remains below key technical support.
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The Bank of Japan kept its policy rate at 1% in July. It came after a 25 basis point hike in June. But the last meeting did not indicate that the tightening cycle was over. The BOJ placed more weight on the risk of the underlying inflation exceeding its 2% target.
The depreciating yen has increased the pressure for higher interest rates. It increases the costs of imported fuel, food and industrial materials. While currency intervention can slow the rate of decline, it may not eliminate the big interest rate spread between Japan and the United States. That could mean that the BOJ needs to tighten policy to counter the primary driver of yen weakness.
In my view, the BOJ may consider a policy rate increase to 1.25% in September/October. September is now the first realistic window while October remains possible if policymakers want more inflation and wage data.
BOJ Interest Rate Decision Keeps September Hike in Focus The BOJ maintained the interest rates steady with 8-1 vote. But the board member Hajime Takata supported an immediate increase to 1.25%. This means that the tightening camp is beginning to grow within the bank as evidenced by his dissent. The bond yield of the 2-year Japanese bond also rose to 1.51% following the meeting. This suggests the bond market expects the interest rates to remain higher.
Governor Kazuo Ueda gave clear warning about the cost of waiting too long. He said that the lack of action could increase the risk of inflation. The bank would also begin to discuss these risks starting with its September meeting. This guidance opens the door for a potential rate hike in September.
This message was supported by the BOJ’s July forecast. The bank added that it would consider raising the policy rate if the economy and prices evolve in line with the bank’s expectations. The bank said that the financial environment is accommodative, as real interest rates remain negative. So, a 1% policy rate might still be too low if the inflation 2%.
The next move will depend on the upcoming data about inflation, wages and currency. The strong wage data and another increase in inflation expectations could warrant a September rate increase. The yen’s depreciation again may push the BOJ into a more urgent decision. The bank could hold off until October or December if these pressures ease.
Japan Inflation and Wage Growth Support Further BOJ Rate Hikes The annual inflation rate in Japan climbed to 1.7% in June and the core inflation rate to 1.6%. Both readings are below BOJ’s target. But they are not based on current prices and take into account government energy subsidies. The BOJ is expecting the core inflation to surge to above 2% in the second half of fiscal 2026.
The producer prices suggest the future inflation. These grew 7.1% year on year in June, following 6.6% growth in May. The chart below shows a strong rise in producer prices since March 2026. Most of this increase was due to increased energy, chemical and petroleum prices. The companies could shift some of these costs back to consumers, making it more difficult for the BOJ to maintain the rates.
The wage data also indicates additional tightening. The average cash earnings grew 3.2% year on year in May.
On the other hand, the real earnings grew 1.4% year on year and continue to grow in 2026 as seen in the chart below.
At the same time, business inflation expectations increased from 2.4% to 2.7%. When wages are growing, consumers can more easily afford higher prices and when expectations are increasing, inflation is more likely to continue.
Strong demand for semiconductors, high energy prices and the weak yen may continue to weigh on inflation. These forces are in favor of transitioning to 1.25% by the end of 2026.
If these factors remain positive and continue to grow, the BOJ could hike rates further to 1.5% in early 2027. But if the oil price drops and the yen continues to strengthen, the bank may be able to take a break after its next rate increase.
USDJPY Forecast as BOJ Rate Hike Supports the Yen The hawkish BOJ and suspected currency intervention pushed the USDJPY lower. The strength in yen at the end of July has pushed USDJPY to close the month around 157.40. This is around 3% down for July and opens the door for further correction in August.
If the BOJ raises rates, then the US dollar will become less attractive relative to the yen. This may put more pressure on USDJPY on the downside.
But the difference in rates between the U.S. and Japan is still quite large. The 2-year yield in the United States was nearly 4.31%, while in Japan it was around 1.51%.
If the BOJ hikes rates and US yields drop, USDJPY may retreat to the 152-155 area. But a BOJ rate hike and another US rate increase would drag the pair back towards 160.
USDJPY Technical Analysis as Pullback Reaches Key Support USDJPY dropped after marking a high at the 164 level and closed the month below the 157 level. This means that the breakout above the 160 level, which was triggered in June 2026, failed. USDJPY still needs to consolidate below the 160-162 area.
The weekly chart below shows that USDJPY has been trending within an ascending channel pattern since the January 2023 lows. If USDJPY continues to drop below 157 next week, it will likely continue its momentum toward the 149-150 area as seen by lower support of the ascending channel pattern.
The importance of the current support zone is highlighted on the daily chart, which shows that USDJPY closed slightly below the rising trend line and the 200-day SMA.
But this was the last day of the month, which triggered strong volatility in the financial markets. This means that a recovery above 158 next week and continued upside momentum may allow the pair to rally toward the 160 area.
However, if the pair continues to drop below the 157 level, it will open the door for a continued decline toward the 152 area. This level is marked by the red dotted support line.
But the RSI indicator shows an extremely oversold condition in the short term and indicates a rebound before the next drop. A recovery above 161.50 will suggest that the bottom has formed. This bottom may allow the pair to continue upside.
In Closing The BOJ has opened the door to another interest rate hike. Rising producer prices, strong wage growth and higher inflation expectations support the tighter policy. The weak yen also increases imported inflation. In my view, the BOJ may raise the policy rate to 1.25% in September or October. It could delay the move if inflation eases or the yen continues to recover.
The higher Japanese interest rates could place further pressure on USDJPY. A continued decline below 157 may push the pair toward the 150-152 area. But the oversold conditions could trigger the short term rebound first. A recovery above 161.50 would indicate that the bottom is confirmed and the pair is ready to move higher again.
Read more: BOJ Rate Hike to 1.25% Puts Japanese Yen in Focus
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Muhammad Umair is a finance MBA and engineering PhD. As a seasoned financial analyst specializing in currencies and precious metals, he combines his multidisciplinary academic background to deliver a data-driven, contrarian perspective. As founder of Gold Predictors, he leads a team providing advanced market analytics, quantitative research, and refined precious metals trading strategies.
USD/JPY held near 163.50 on Thursday, with the yen retreating slightly after strengthening in the previous session. The currency had been supported by a broader dollar decline following the Federal Reserve's decision to keep interest rates unchanged.
However, three FOMC members voted in favour of a rate hike, and Fed Chairman Kevin Warsh stressed that the pause should not be interpreted as a rejection of further policy tightening. Future decisions will continue to be data-dependent.
The Bank of Japan is also expected to keep rates unchanged on Friday but is likely to signal that further hikes remain possible to contain the yen's decline. Verbal interventions from Japanese authorities have so far provided little relief, and the BOJ has offered no clear guidance on the timing of its next move.
Geopolitical tensions have once again intensified, with media reports indicating that the United States has resumed airstrikes on Iran following attacks on American forces in the region.
Technical analysis
On the H4 USD/JPY chart, the market is forming a consolidation range around the 163.60 level, currently extending between 163.20 and 163.89. A move higher towards 163.60 is expected, with scope for the trend to extend to 164.15 and then to 164.85. The MACD indicator supports this scenario, with its signal line above zero but pointing downwards, indicating the potential for short-term consolidation before further upside.
On the H1 chart, USD/JPY has completed a downward move to the 163.20 level. A move higher towards at least 163.60 is expected next. A breakout above this level would open the way for a continuation towards 164.15. The Stochastic oscillator confirms this scenario, with its signal line above 50 and pointing upwards towards 80, indicating short-term bullish momentum.
ConclusionUSD/JPY is trading in a narrow range as markets digest the Federal Reserve's decision to hold rates steady, despite three dissenting votes and Chairman Warsh's insistence that the pause does not signal the end of tightening. The dollar's modest decline after the announcement provided some relief for the yen, although the currency remains vulnerable. Attention now turns to the Bank of Japan's policy meeting on Friday, where rates are expected to be left unchanged but with hawkish signals to support the currency. Geopolitical risks have re-emerged following reports of renewed US airstrikes on Iran. Technically, the pair appears poised for further upside towards 163.60 and beyond, with the BOJ's guidance and intervention risks likely to determine the near-term direction.
Rabobank říká, že tříměsíční cíl pro USD/JPY na úrovni 159 nyní vypadá optimisticky. Pár se drží poblíž 163,86 a další růst závisí na jestřábím postoji BoJ a slabších očekáváních Fedu.
Economists say the Dollar-Yen could extend higher unless the BoJ signals faster rate hikes, with its three-month forecast at 159 now requiring several factors to align. The US Dollar traded close to 163.84 against the Japanese Yen on Wednesday, holding near its highest level of 2026 as markets awaited policy decisions from both the Federal Reserve and Bank of Japan.
USD/JPY has gained around 4.5% since the end of December and approximately 0.8% in July alone. The pair has also risen in five of the past six months, leaving the Yen under sustained pressure.
Latest — Exchange Rates:
Dollar to Yen (USD/JPY): 163.86431 (0.00%)
Euro to Dollar (EUR/USD): 1.137884 (-0.06%)
Pound to Dollar (GBP/USD): 1.328349 (-0.02%)
Rabobank says Friday’s BoJ meeting will come with one advantage: policymakers will already know the outcome of the Fed decision.
That matters because the bank believes the FOMC “may have more impact on the USD/JPY exchange rate than” the BoJ’s own announcement.
A surprise Fed hike would likely deliver another powerful Dollar boost. Rabobank does not expect that outcome, however, and says unchanged US rates could instead trigger “a little profit-taking on long USD positions”.
The Yen’s bigger test comes a day later.
Rabobank argues that recent BoJ comments may have been “specifically aimed at preparing markets for hawkish signals” from Friday’s meeting. Without them, the risk is straightforward: “an absence of hawkish signals from the BoJ this week could open the door for further upside pressure on USD/JPY”.
Image: USD/JPY year-to-date chart showing the climb from January lows near 152 towards 164 USD/JPY’s path this year helps explain why Rabobank thinks the BoJ cannot afford an ambiguous message. The pair has not simply spiked towards 164; it has rebuilt its advance in stages since May, repeatedly recovering from shallow setbacks.
That persistence is the uncomfortable part for Tokyo. Verbal warnings and earlier Ministry of Finance intervention have slowed the move at times, but neither has changed its direction for long. The chart therefore supports Rabobank’s view that intervention alone may be “too costly” when the underlying force is an appreciating US Dollar.
Rabobank notes that the MoF has not bought Yen in the open market since spending JPY11.73 trillion between late April and late May.
One explanation is cost. The bank says officials may simply consider it “too costly to push against an appreciating USD”, particularly while US rate expectations remain firm.
There are signs that Japanese policy support has had some impact. Although USD/JPY has climbed sharply, the Yen is still the fourth-best-performing G10 currency over the past three months because the Dollar has strengthened even more broadly.
Rabobank says this suggests “both the MoF’s intervention and the hawkish signals from the BoJ have had some impact in supporting the JPY”.
Near-Term USD/JPY Forecast: A Move Back to 159 Needs a Hawkish BoJ and Softer Fed Expectations Rabobank maintains a three-month USD/JPY forecast of 159, but admits that target “currently looks optimistic”.
A faster BoJ tightening cycle would help. The bank says an October rate increase, rather than waiting until December, could provide the Yen with support.
Japan’s inflation backdrop gives policymakers room to sound firmer. The BoJ has said an underlying price measure remains well above its 2% target, while wage negotiations have delivered another strong result.
Even that may not be enough on its own.
Rabobank says a move to 159 would likely require “various factors to come together”: greater reassurance over Japan’s fiscal outlook, a clearly hawkish BoJ and a decline in fears of further Fed tightening.
The final ingredient may prove decisive. As the bank puts it, “how far the JPY can recover versus the USD, if at all, is likely to be determined” by the Fed Chair’s message.
The latest trading sessions continue to show weakness in the Japanese yen. This dynamic is reflected in USD/JPY, which has gained more than 0.7% over the last 3 sessions, highlighting the loss of strength in the Japanese currency.
For now, buying pressure in the pair remains supported by the wide rate differential with the United States, which could even widen over the coming months. In addition, renewed dollar strength, driven by updates in the Middle East, has also supported the advance in USD/JPY.
If these catalysts remain in place, buying pressure in the pair could continue to be relevant over the next few trading sessions.
Is the rate differential still weighing on the yen? Over the last few months, the rate differential between the United States and Japan has been one of the main factors behind yen weakness. While the Federal Reserve maintains a reference rate of 3.75%, Japan keeps one of the lowest interest rates in the world, near 1.00%.
This difference is also reflected in the bond market. Although bonds in both countries have shown recent increases in yields, the gap remains wide. U.S. 10-year Treasury yields have already reached a new yearly high near 4.7%, while Japan’s 10-year bond yields remain much lower, around 2.7%.
Source: TradingEconomics
This dynamic continues to limit the appeal of the Japanese yen. Higher U.S. bond yields favor dollar-denominated investments over yen-denominated assets, a relationship that has remained in place for several months and has restricted demand for the Japanese currency.
What is relevant now is that this differential could widen even further. So far, there have been no major updates from the Bank of Japan pointing to a possible rate hike. In contrast, the Federal Reserve has started to reflect a higher probability of higher rates over the coming months.
According to the CME Group probability table, for the September 16 decision, there is still a dominant probability above 56% that the United States could deliver a rate hike, which would further widen the differential with Japan.
Source: CMEGROUP
As a result, if the market continues to see a stable Bank of Japan with no relevant changes, compared with a potentially more aggressive Federal Reserve, the rate differential could continue to favor the relative appeal of the dollar. This dynamic may make a sustained yen recovery more difficult and could maintain buying pressure in USD/JPY over the next few sessions.
Is Middle East becoming relevant again? New updates in the Middle East suggest that risk may be increasing not only around the Strait of Hormuz, but also in the Red Sea, following attacks carried out by Iran-backed groups from Yemen. This event adds to new U.S. military actions and reflects a scenario that still appears far from a negotiated solution in the short term.
The escalation continues to support oil prices, increase uncertainty and lift the market’s risk premium.
In this context, the U.S. dollar has started to show a renewed recovery. This is reflected in the DXY index, which measures the dollar’s strength against its main peers, and which has already moved above the 101-point area after several consecutive advances.
This suggests that, as seen in previous months, the dollar could be acting as a liquidity-driven safe-haven currency amid rising tensions in the Middle East.
Source: TradingEconomics
This dynamic is also important for the yen. If the conflict continues to escalate and the dollar maintains its strength as a safe-haven asset, the Japanese currency could struggle to regain ground consistently. For this reason, USD/JPY could continue to show buying pressure over the next few trading sessions.
Technical forecast for USD/JPY
Source: StoneX, Tradingview
Bullish trend appears unstoppable: For several months, USD/JPY has maintained a dominant bullish trend line. This structure remains the most relevant pattern on the chart, especially due to the lack of selling moves strong enough to put the main trend at risk. As long as buying pressure remains in place, this trend line could continue to act as the dominant technical reference over the next few sessions.
RSI: The RSI remains above the neutral 50 level, reflecting dominant buying impulses in the short term. However, it is also important to note that the indicator has started to form lower highs, while USD/JPY price action continues to register higher highs. This dynamic has created a possible bearish divergence, which could warn of excessive recent buying pressure and open room for potential short-term corrections
MACD: The MACD shows a histogram increasingly close to the neutral 0 area. This suggests that the strength of short-term moving averages is starting to balance out. For this reason, the indicator could also be anticipating a phase of greater neutrality on the chart over the next few sessions.
Key levels:
164.238 – Key resistance: Given the lack of relevant references from previous years, this level coincides with the 61.8% area of a trend-based Fibonacci extension. If price manages to approach this zone again, it could reinforce the buying bias and keep the bullish trend line as the dominant structure.
161.898 – Near-term barrier: This area works as an important technical reference, as it coincides with the highs recorded in previous weeks. It could also act as a tentative barrier in case of possible short-term corrections.
160.214 – Main support: This area remains the most relevant support on the chart. In addition to coinciding with recent retracements and acting as a psychological market level, it also aligns with the base of the major bullish trend line. Moves that approach this level again could put the bullish structure at risk and open room for a more relevant selling bias over the coming weeks.
Written by Julian Pineda, CFA, CMT – Market Analyst
Japonský jen posílil, protože obchodníci uzavírají rekordní short pozice před americkou inflací CPI. USD/JPY testuje rezistenci pod 163, zatímco riziko intervence zůstává.
Japanese yen volatility has returned as traders unwind record short positions ahead of US CPI. With USD/JPY testing major resistance below 163 and intervention risks lingering, futures positioning suggests gains may become harder to come by. Here are the key USD/JPY and AUD/JPY trade setups to watch.
View related analysis:
Yen Bears Capitulate, US Dollar Nearing Sentiment Extreme? | COT report Australian Dollar Outlook: AUD/USD Bounce Losing Steam Ahead of US CPI Gold Price Outlook: Bulls Weigh the Odds of Another Bounce Above $4,000 How to Read the COT Report to Track Forex Market Sentiment Japanese Yen Short Covering Puts USD/JPY at a Critical Juncture Japanese Yen Volatility Returns Ahead of US CPI Volatility has perked up for the Japanese yen over the past few weeks, and it has cut both ways. A market-led selloff heading into the 2 July non-farm payrolls (NFP) report saw USD/JPY fall by as much as 200 pips before recouping those losses over the following four days. On Friday, USD/JPY fell more than 100 pips on reports that Japan's largest pension fund had been instructed to purchase domestic assets.
This is quite a significant development because it suggests Japan is exploring alternative ways of supporting the yen besides traditional currency intervention. It could prove a shrewd approach, allowing policymakers to avoid swimming against the tide while the Federal Reserve maintains a hawkish stance and US economic data continues to outperform.
Source: ICE, TradingView
Yen Gains May Be Harder to Come By I think the bigger takeaway is that easy gains on USD/JPY may be harder to come by, but that is not the same as saying the pair cannot move higher. The combination of traders remaining wary of potential intervention, alongside efforts to support the yen without directly intervening, could allow USD/JPY to grind higher while keeping volatility elevated. Put another way, the broader uptrend may remain intact, but traders should expect more frequent bouts of two-way price action.
With USD/JPY testing resistance ahead of today's US inflation report, traders are on high alert for either a bullish breakout or a sharp reversal. Markets continue to price in a hawkish Fed, so it may not take much of a downside CPI surprise to shake the market from these elevated levels, particularly as Japanese yen bears continue to capitulate in the futures market.
Japanese Yen Futures Positioning: USD/JPY COT Report I have been warning for several weeks about the potential sentiment extreme in Japanese yen futures. Gross short positions had climbed to record highs among both asset managers and large speculators, while long positions also edged higher despite the yen's persistent downtrend (USD/JPY uptrend). That pushed net-short exposure close to two-year highs for both groups of traders.
However, the latest Commitment of Traders (COT) report showed a clear reduction in bearish positioning last week. Gross short exposure was cut by a combined 48.8k contracts across both trader groups, falling 11.6% among large speculators and 12.7% among asset managers. Long positions increased only marginally, making this a story of short covering rather than fresh bullish conviction.
The conditions are not yet in place for a sustained yen rally, but if bearish traders continue heading for the exit, gains on USD/JPY may become harder to come by than they have been over recent months.
Source: CFTC (COT), CME, LSEG
USD/JPY Technical Analysis: US Dollar vs Japanese Yen The 1-hour chart shows a decent uptrend from Monday's low. Prices are testing the weekly R1 pivot point while remaining above their daily, weekly and monthly VWAPs. We could see an early breakout attempt during today's session towards the cycle highs, although traders should note the July VPOC at 162.69, which aligns with last week's high and could provide resistance.
Bulls may also want to tread carefully around the cycle highs and take note of the pre-NFP price action, as it could trigger another pre-emptive pullback. Even so, several support levels are clustered around 162, including the 2024 high, the weekly pivot point and Monday's VPOC.
It could then come down to the US inflation report to determine whether we see a meaningful breakout or a deeper pullback. While a hot CPI report could tempt bulls to push above 163, I suspect the bigger move may come from a softer-than-expected print. That could see USD/JPY rotate lower within its recent choppy range between 160 and 162.50.
Ultimately, I suspect CPI will need to surprise decisively to the upside for any breakout above 163 to prove sustainable.
Source: ICE, TradingView
This content was created by an affiliate of FOREX.com and represents the views and opinions of the author/speakers, not the views and opinions of FOREX.com, StoneX Group Inc., or its subsidiaries. The content has not been independently reviewed by FOREX.com
AUD/JPY Technical Analysis: Australian Dollar vs Japanese Yen Compared with USD/JPY, volatility remains lower on AUD/JPY. Yet it has caught my attention because it presents several clusters of support and resistance that could provide attractive trading setups. It also partially removes some of the event risk associated with the US inflation report.
The daily chart shows prices oscillating between the 50-day and 100-day EMAs. Momentum has turned slightly lower from last week's high and monthly pivot point, while Monday's shooting star signals a failed attempt to retest Friday's doji high.
Even if prices spike above last week's high, the June VPOC sits at 113.09 and could provide resistance, followed by the May VPOC at 113.48. While 112 may offer initial support, a break below that level brings the 100-day EMA into focus, near the Ministry of Finance (MOF) intervention low.
Rostoucí výrobní ceny, dovozní náklady a výnosy dluhopisů zvyšují sázky na další zvýšení sazeb BOJ. USDJPY zůstává nad 160,30 a průraz nad 163,70 by otevřel cestu k 175.
Key Points:Rising producer prices, import costs and bond yields keep another BOJ rate hike in focus.USDJPY remains bullish above 160.30, with a break above 163.70 opening the door toward 175.GBPJPY may target 220, while EURJPY could extend toward 190.50 if key support levels hold.
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The interest rate outlook for Japan remains uncertain as inflationary pressure continues to build. The producer prices are rising, import costs remain high and government bond yields have moved to multi-decade highs. These trends support the case for another Bank of Japan (BOJ) rate hike later this year. But the BOJ may still wait for stronger wage growth and increase in consumer inflation. This leaves the yen sensitive to policy signals, while USDJPY, GBPJPY and EURJPY remain technically strong.
BOJ Rate Hike Outlook Strengthens as Japan Inflation Rises Japan’s producer price index (PPI) increased by 7.1% YoY in June. This beat the market expectation of 6.8% and exceeded the upwardly revised 6.6% gain in May. The increase indicates that businesses are passing their increased input costs to customers faster than in the past. The trend could increase the consumer inflation and lead the BOJ to tighten again.
According to the data, the fuel prices increased by 22.8% while non-ferrous metal prices jumped by 39.2%. Energy prices were pushed up by the Middle East conflict while the AI material demand has lifted the metal prices. These pressures may remain high if tensions continue and supply conditions remain tight. This suggests that the BOJ may hike the interest rate in October.
A low yen is putting on a new layer of inflation. The import prices continued to rise as weak yen and higher energy costs raised the cost of imported goods. The chart below shows that Japan’s imports increased 12.5% to JPY 9,890.2 billion in May 2026. Now the BOJ must decide whether the higher import prices will spread into wages and consumer prices or remain at the wholesale level.
Japan Bond Yields Hit Multi-Decade Highs on Inflation Fears Japanese government bond yields are also pointing toward a higher interest rate environment. The 10-year JGB bond yield rose to a 2.90%, the highest rate since September 1996. It rose during nine consecutive sessions since 26 June, in response to rising oil prices, higher inflation and concerns about Japan’s fiscal health.
The strong drop in yields on Friday does not change the bullish trend. Rising yields suggest that the bond investors want greater compensation for the long term inflation risks.
The long term bond yields have increased with bigger momentum. The 20-year yield rose to 3.89%, while the 30-year yield reached 4.03%. The 40-year yield advanced to 4.055%. These moves indicate that investors are worried about the big government spending plans and that the policy may stay too loose and inflation will continue to rise.
But the shorter end of the yield curve is sending a more cautious signal. The 2-year yield reached to 1.445% and the 5-year yield reached to 1.99%. The yield gap between the 10-year and 2-year yields has increased significantly as seen in the chart below.
The steepening reflects a greater sense of inflation risk in the long end, and less confidence that the BOJ will hike soon. This suggests that BOJ may wait for stronger consumer prices and wages to increase its policy rate from 1% to 1.25%.
USDJPY Forecast: BOJ Rate Hike Risk Challenges Dollar Strength US–Japan Yield Gap Narrows as Japanese Yields Rise The interest rate outlook creates mixed environment for USDJPY. The yen should find support with higher Japanese yields and the prospect of another BOJ rate hike. A more hawkish BOJ could reduce the yield gap between Japan and the U.S. This would detract from any yen funded carry trades and may potentially lead to a lower USDJPY.
The chart below shows that the Japanese yields have increased much faster since 2022. But the U.S. yields have remained relatively high. As a result, the yield gap between the two countries has narrowed. This trend reduces the interest rate advantage of holding dollars over the yen. This may provide support for the Japanese currency. But the U.S. yields remain higher so the dollar still retains an important yield advantage.
But the low yen value still plays a crucial role in Japan’s inflation issues. As energy import prices go up, the demand for foreign currencies and the pressure on the yen increase. This might keep USDJPY high until the BOJ gives more clear indication of what it will do next. Any delay of the next rate hike would be positive for USDJPY while guidance of an October increase could trigger an import yen recovery.
USDJPY Break Above 163.70 Opens the Door to 175 From technical perspective, USDJPY is consolidating at the pivotal area of 160 to 162. The price is compressing within this region before an upside breakout. A break above this zone would likely open the door for strong surge in USDJPY toward the 175 target. This target is defined by the ascending channel pattern that extends from the 2023 lows.
The consolidation around this important region is also visible on the short term 4-hour chart. It shows that the pair is now consolidating between 160.30 and 163.70. The range is widening and prices are compressing within an ascending broadening wedge pattern. A break above 163.70 would indicate a stronger rally in USDJPY toward 166. But 160.30 remains strong support in the short term. Any correction is considered a buying opportunity for traders to push the pair higher.
GBPJPY Forecast: 218 Breakout Opens the Door to 220 Higher Japan rate expectations may also put pressure on GBPJPY. The very large interest rate differential between the United Kingdom and Japan has been good for the pound. But this advantage may weaken if the BOJ hikes the rates again to 1.25%. The higher Japanese bond yields could encourage investors to reduce carry trades and move capital back to yen.
But the pair may still be supported if Bank of England maintains higher rates or takes a conservative approach to rate cuts. Thus, GBPJPY will be reliant on both central banks’ relative directionality. The most bearish risk would be a hawkish BOJ and a softer Bank of England outlook.
GBPJPY also shows strong positive price action. This positive price action is reflected in the formation of inverted head and shoulders pattern from January 2026 to April 2026.
This bullish consolidation pattern broke higher in April 2026. After the breakout, the pair continued to rally on the strength of the pound and the weakness of the Japanese yen. The pair has already broken 216.30 and is now dropping back toward support to attract buyers. The 215.60 to 216.30 area remains strong support. A break above the 218 level would likely push the pair to further highs.
EURJPY Forecast: Bullish Trend Targets 190.50 Eurozone rate expectations are not that aggressive. Therefore, EURJPY could be more responsive to BOJ communication. If the European Central Bank pivots towards easier policy ahead of the BOJ’s next rate increase, the interest rate spread between Europe and Japan will narrow. This would provide support for the yen and increase the risk of a drop in EURJPY.
The outlook also depends on the global risk sentiments. The escalation in the conflict in the Middle East would drive up energy costs for Japan and Europe. But imported fuel needs could exert pressure on the yen in the near term for Japan. The EURJPY could hold steady ahead of the BOJ. But a clear sign that the bank will hike rates in October or at year’s end could generate a deeper pullback.
EURJPY also remains strong and is consolidating within rising trend lines. The immediate support remains at 183.50. The pair is also supported by the 200-day SMA at 182.80. If EURJPY continues higher, the immediate target remains 190.50. As long as the 180 level holds in EURJPY, the next move in the pair will likely be higher. The 50-day and 200-day SMAs are rising which indicates that any correction may attract new buyers.
Final Words The interest rate outlook in Japan remains tilted towards further tightening. The producer prices are high, import costs are increasing and bond yields are rising. These factors suggest another BOJ rate hike. But the central bank might still wait for the clear signals from wages and consumer inflation. A rate hike from 1% to 1.25% could be on the cards later this year if energy prices remain elevated and the yen remains weak.
If BOJ hints at a rate hike in October or at the end of the year, the yen could get some support. But the technical picture of USDJPY, GBPJPY and EURJPY remains bullish. A break above 163.70 in USDJPY would open the door for a rally to 175. GBPJPY might push higher towards 220 and EURJPY could head to 190.50.
Read more: Weak Jobs Data Hits Fed Hike Odds as Dollar Tests Support
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Muhammad Umair is a finance MBA and engineering PhD. As a seasoned financial analyst specializing in currencies and precious metals, he combines his multidisciplinary academic background to deliver a data-driven, contrarian perspective. As founder of Gold Predictors, he leads a team providing advanced market analytics, quantitative research, and refined precious metals trading strategies.
USD/JPY fell to 161.67 on Friday, with the yen fully recovering its losses from the beginning of the week. Market participants are once again increasing expectations of possible intervention by Japanese authorities, following the national currency’s recent move to nearly 40-year lows.
Investors are also awaiting the release of official intervention data later this month to determine whether the Bank of Japan’s actions were behind the yen’s sharp – though brief – gains in recent weeks.
Fresh macroeconomic data has attracted additional attention. Japan’s producer prices rose 7.1% year-on-year in June, marking the fastest pace since March 2023. Cost pressures remain elevated due to the Middle East conflict and the significant weakening of the yen.
At the same time, the Japanese currency found support from lower oil prices following reports that the US and Iran intend to continue peace negotiations despite the recent escalation. The decline in oil prices prompted a retreat in both the dollar and US Treasury yields, while also easing concerns about rising import costs for Japan, which remains one of the largest buyers of Middle Eastern oil.
Technical Analysis On the H4 USD/JPY chart, the market is forming a consolidation range around the 161.57 level, currently extending up to 162.62. A decline towards 161.30 is expected today, followed by a rebound to 162.62, with scope for the trend to extend to 164.15. The MACD indicator supports this scenario, with its signal line above zero and pointing firmly upwards, reflecting continued bullish momentum.
On the H1 chart, the market has completed a downward move to 161.20, with a possible extension to 161.16. A move higher towards 162.62 is expected. A breakout above this level would open the way for a continuation towards 164.15. The Stochastic oscillator confirms this scenario, with its signal line above 20 and pointing upwards towards 80, indicating increasing short-term upside momentum.
Conclusion The yen has fully recovered its losses from the start of the week, supported by renewed expectations of potential Japanese intervention and lower oil prices following signs of US–Iran peace negotiations. Producer prices in Japan rose at their fastest pace since March 2023, reflecting persistent cost pressures from the Middle East conflict and currency weakness. However, falling oil prices eased concerns over Japan’s energy import costs and contributed to a retreat in the dollar and Treasury yields. Technically, USD/JPY may see further downside towards 161.30 in the near term, but the broader uptrend remains intact, with potential for a rebound towards 162.62 and beyond. The market’s focus now turns to official intervention data for confirmation of recent central bank activity.
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GBP/USD se drží beze změny kolem 1,3352, protože ústup britského politického rizika vyrovnal obnovenou poptávku po USD. Dolar podpořil i nákup po poklesu po pátečních datech z trhu práce.
The Pound to Dollar (GBP/USD) exchange rate traded in a narrow range on Monday as easing UK political uncertainty offset renewed demand for the US Dollar following last week's sharp selloff.
At the time of writing, GBP/USD was trading at $1.3352, little changed on the day.
Latest — Exchange Rates:
Pound to Dollar (GBP/USD): 1.335559 (+0.03%)
Euro to Dollar (EUR/USD): 1.141696 (-0.17%)
Dollar to Yen (USD/JPY): 162.33951 (+0.61%)
DAILY RECAP:
The US Dollar attracted support on Monday as US markets reopened following the long Independence Day weekend.
The ‘Greenback’ seemed to have entered oversold conditions following its sharp losses in the wake of last week’s non-farm payrolls report, which reported an unexpectedly large slowdown in job creation.
Therefore, some price-conscious investors were willing to buy the dip, lifting the US Dollar.
Meanwhile, the latest ISM services PMI printed in line with expectations, easing from 54.5 in May to 54 in June. Although this was a slight softening of activity, it still represented a healthy expansion in the US services sector.
Meanwhile, the Pound (GBP) held strong on Monday as investors continued to scale back the political risk premium that has weighed on Sterling in recent weeks.
With MP Andy Burnham widely expected to become the next Prime Minister, markets appear increasingly confident that the UK will avoid a lengthy and disruptive Labour leadership contest.
Burnham has moved to reassure investors since launching his leadership bid, pledging to maintain the government’s existing fiscal rules while also outlining ambitious plans to support the economy.
This has been well received by GBP investors, with Sterling finding support as concerns over UK political instability continue to recede.
Near-Term GBP/USD Forecast: US Employment Data to Support the Dollar? Looking forward, high-impact data is thin on the ground on Tuesday, with the US weekly ADP employment change figure being the only release of note. This mid-tier data could support the US Dollar, if it reports healthy growth in US private employment.
Elsewhere, market risk appetite could influence the pairing. The safe-haven US Dollar would likely benefit if the market mood sours, while the increasingly risk-sensitive Pound could attract support if sentiment brightens. Any shifts in risk appetite could see GBP/USD waver.
