Key Points:EUR/USD is swinging between gains and losses as traders react to Germany's Exports data. USD/CAD made an attempt to settle below the support at 1.3750 - 1.3765.USD/JPY rebounded from session lows as traders focused on rising Treasury yields.
EUR/USD
-0.02%
EUR/USD ForecastGBP/USD
-0.07%
GBP/USD ForecastUSD/CAD
-0.13%
USD/CAD ForecastUSD/JPY
+0.28%
USD/JPY Forecast
U.S. Dollar Attempts To Rebound After Recent Pullback
DXY 080926 4h Chart U.S. Dollar Index moved away from session lows as traders focused on rising Treasury yields. The yield of 2-year Treasuries climbed towards the 4.40% level, while the yield of 10-year Treasuries settled near 4.80%.
I’d note that Bessent’s buyback efforts have so far failed to push yields of longer-dated bonds lower. The yield of 30-year Treasuries settled near 5.25%, close to the critical 5.30% level.
In case U.S. Dollar Index climbs above the 99.00 level, it will head towards the nearest resistance level, which is located in the 99.25 – 99.40 range.
EUR/USD Stays Above The 1.1600 Level EUR/USD 080926 4h Chart EUR/USD is mostly flat as traders focus on Germany’s Exports report. The report showed that Exports decreased by -0.8% month-over-month in July, compared to analyst forecast of 0%.
I believe that traders are already cautious ahead of the ECB Interest Rate Decision, which will be released on Thursday.
The nearest support level for EUR/USD is located in the 1.1600 – 1.1615 range. If EUR/USD manages to settle below the 1.1600 level, it will head towards the next support level at 1.1500 – 1.1515. RSI is in the moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
GBP/USD Attempts To Settle Above 1.3565 GBP/USD 080926 4h Chart GBP/USD continues its attempts to settle above the resistance level at 1.3550 – 1.3565 as traders focus on the BRC Retail Sales Monitor report from the UK. The report showed that Retail Sales increased by +0.5% year-over-year in August, compared to analyst forecast of +1.2%.
If GBP/USD manages to settle above the 1.3565 level, it will head towards the next resistance, which is located in the 1.3635 – 1.3650 range. On the support side, a move below the 50 MA at 1.3533 will push GBP/USD towards the next support at 1.3470 – 1.3485.
USD/CAD Rebounds From Session Lows
USD/CAD 080926 4h Chart USD/CAD moved lower as traders focused on U.S. – Canada trade war. Canada’s Prime Minister Mark Carney said that counter-tarrifs against the U.S. were necessary to protect Canadian businesses. Interestingly, the market does not believe that the trade war is a negative catalyst for the Canadian currency.
From the technical point of view, USD/CAD made an attempt to settle below the support level at 1.3750 – 1.3765 but lost momentum and rebounded towards the 1.3790 level. In case USD/CAD settles back above 1.3800, it will head towards the nearest resistance at 1.3825 – 1.3840. A successful test of this level will push USD/CAD towards the next resistance at 1.3900 – 1.3915.
USD/JPY Climbed Back Above 154.00 Amid Rising Treasury Yields USD/JPY 080926 4h Chart USD/JPY attempts to rebound after the strong sell-off as traders react to rising Treasury yields and focus on Japan’s second-quarter GDP Growth Rate report. The report showed that Japan’s GDP Growth Rate was +0.4%, in line with analyst estimates.
Traders try to guess whether BoJ is ready to intervene again at current levels or the Bank has finished its interventions. The expectations of a rate hike from the BoJ served as an additional bullish catalyst for the yen in recent trading sessions, but Fed may also raise rates at the meeting on September 16.
In case USD/JPY stays above the 154.00 level, it will head towards the resistance level at 155.00 – 155.50. A move above the 155.50 level will open the way to the test of the resistance level at 157.50 – 158.00.
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Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
USD/JPY has broken below BofA’s 155 trigger as BoJ tightening bets, repatriation talk and carry liquidation pull its 149 target closer. The US Dollar to Japanese Yen (USD/JPY) exchange rate plunged to 152.89 on Tuesday, extending its September fall beyond 4% as Bank of Japan tightening bets, repatriation speculation and carry-trade liquidation drove fresh Yen buying.
BofA’s 149 year-end target now sits only 2.5% below the latest low, less than a week after the bank mentioned selling USD/JPY at 159.70.
The move from BofA’s entry level to 152.89 represents a gain of roughly 4.3% for the short position before carry and trading costs.
“We recommend selling USD/JPY at 159.70, targeting 149.0 (our year-end forecast) with a stop loss at 164.0.”
The 155 Trigger Has Already Broken BofA identified 155 as more than a conventional support level.
“From here, 155 is a key level below which we think domestic yen buying could accelerate.”
That break has now happened decisively, with USD/JPY falling from around 160 at the beginning of September to below 153 during Tuesday’s Asian session.
The speed of the decline suggests that stop-loss orders and the unwinding of leveraged Yen shorts have reinforced the move.
When we examined JPMorgan’s 164 year-end forecast last week, USD/JPY was still holding above the bottom of its 155-165 central range.
The pair has since fallen through that floor, leaving BofA’s bearish call much closer to current market direction.
Image: USD/JPY 3-month graph Policy and Domestic Flows Support the Yen The carry-trade unwind is only one part of BofA’s case.
The bank also expects faster BoJ tightening and sees scope for Japanese institutions to bring more capital home as domestic bond yields become increasingly attractive.
“Potential rotation from foreign bonds into JGBs among Japanese investors, including pension funds, could support JPY.”
BofA argues that higher Japanese rates would weaken the justification for maintaining large short-Yen positions.
“If the BoJ raises rates at its September meeting and maintains a hawkish communication stance, the rationale for selling the yen would weaken.”
The Bank of Japan meets on September 17-18, with markets now almost fully pricing a 25-basis-point increase to 1.25%.
BofA expects quarterly rate increases to take the policy rate towards 2% by July 2027, while stronger Japanese wage and growth data have added credibility to the tightening outlook.
There are still reversal risks.
A less hawkish BoJ decision or another firm US inflation report could revive demand for the Dollar and slow the move towards 149.
For now, however, the break below 155 has activated the buying response BofA anticipated, placing the psychological 150 level between spot and the bank’s target.
Exchange Rates UK Research Our currency coverage draws on live market data, official economic releases and published bank research.
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.
Gold, silver correlations with dollar near historical extremes
DXY sits just above an important support zone
US inflation next key risk event for markets
Disorderly yen carry trade unwind remains a left-tail risk
Gold and silver have essentially become a play on directional movements in the US dollar over the past month, and especially the past fortnight, with the strength of the inverse relationship pushing towards historical extremes.
Dollar relationship moves into rare territory
While the inverse relationship between gold, silver and other precious metals with the US dollar has been evident for decades, the strength of the relationship is unusually high right now.
Source: LSEG
Over the past 10 trading days, gold’s correlation with DXY has fallen to around -0.88, while silver’s stands at -0.83. Those readings sit around the 3rd percentile for gold and 4th percentile for silver relative to their respective histories, meaning the inverse relationship has only been stronger during a very small proportion of comparable windows.
The 20-day relationship is also tight, with gold at around -0.76 and silver at -0.73, ranking near the 6th and 5th percentiles respectively.
With the DXY just above an important support level, should that extreme relationship be maintained, a downside break in the DXY points to the increased risk of renewed upside across the precious metals complex.
Yen strength adds pressure to the dollar
Source: Tradingview
DXY finds itself struggling beneath the 200-day moving average, having slid back beneath it late last week, and is now perched above a support zone comprising the May 29 low of 98.75, along with the 50% retracement of the 2026 low-high at 98.68.
There were two unsuccessful probes beneath the zone back in August, but with the oscillators rolling over, indicating downside momentum is building again, the risk of a downside break appears to be growing, especially with the Japanese yen continuing to strengthen on Tuesday, seeing USD/JPY hit levels not seen since February.
Should the unwind be sustained, it would only add to downside risk for the broader DXY index, especially should the euro join the move.
Gold wedged between key levels
Source: Tradingview
Early gains in Asia have reversed in the latter parts of the session, with the push higher stalling just beneath the confluence of the August downtrend and horizontal resistance at $4,450 an ounce. Those levels are the immediate focal point overhead.
Underneath where the price now trades, $4,367 is the first level on the radar given it acted as support and resistance on multiple occasions going back to the early parts of this year. Further below, the 23.6% Fib retracement of the January to June low-high is located at $4,333 an ounce. Dips beneath that level, down to the early September low of $4,283, have made for good buying over recent months.
The message from the oscillators is one of neutrality. RSI (14) sits just beneath the 50 while MACD is running parallel to the signal line, sitting just in negative territory.
With the technical picture for gold offering little from a directional breakout perspective, dollar performance around the US inflation data on Thursday and Friday may be influential in determining which direction the price shifts next.
Silver triangle points to breakout risk
Source: Tradingview
Like gold, silver has staged a sizable reversal late in the Asian session, mirroring similar price action in Asian tech stocks that opened strongly before gains were slowly whittled away.
From a technical perspective, the price on the four-hourly continues to coil in an ascending triangle, with moves above $67 towards $67.50 resistance capping gains for the moment, while dips towards the uptrend established in early September continue to attract buying.
While ascending triangles are often associated with bullish breakouts, I would not be rushing to establish longs without a clear and sustained push above $67.50, given the iffy price beneath it recently.
The cautious view is only strengthened by the risk of forced yen carry trade unwinds, some of which have likely found their way into the precious metals space, creating the risk of disorderly downside moves across the precious metals complex. Whichever direction the price breaks from the structure may be informative as to where directional risks lie over the medium term.
Overhead, silver struggled underneath $70 in late August, and while there was one bullish breakout that eventually occurred, it stalled at $70.90, a level that acted as support and resistance on multiple occasions going back to late April.
On the downside, $65.50, the September 4 low of $64.75, and $63.30 are the focal points before $62.90 comes into view, another support and resistance level going back to earlier this year.
The message from the oscillators is neutral with RSI (14) sitting at 48 while MACD is flatlining above the signal line, holding just in positive territory. Focus should therefore be on price rather than adoption of a specific directional bias, with DXY gyrations another useful input when assessing potential setups.
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
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.
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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.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
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.
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.
EUR/USD slides after strong US jobs data as USD/JPY tests a major swing low and USD/CAD surges following a sharp Canadian employment miss.
In this article:EUR/USD
-0.12%
EUR/USD ForecastUSD/JPY
+0.13%
USD/JPY ForecastUSD/CAD
+0.45%
USD/CAD Forecast
EUR/USD Technical Analysis
EUR/USD price chart showing price at 1.16006, trading below the 50 EMA (1.16133) and the 200 EMA (1.16155). Source: TradingView The euro has plunged after the much stronger-than-anticipated jobs number coming out of the United States, sending it all the way down to basically 1.1585 or so before bouncing. I think we now have a range-bound market that doesn’t really know what to do. I currently have this range between yesterday’s point where I said I would be a seller at 1.1640 and the bottom here at 1.1580.
I do favor, I suppose, the downside from a longer-term standpoint still, but this is a market that, at least in the short term, probably is going to bounce around. Keep in mind Monday is a holiday in the United States.
USD/JPY Technical Analysis
USD/JPY price chart showing price at 155.732, trading below the 50 EMA (156.968) and the 200 EMA (158.518). Source: TradingView The dollar-yen is suddenly a lot more interesting to me. This is a major swing low that we find ourselves testing again. It was interesting that the initial reaction was to go to the upside. Makes sense: interest rate spike. I think there’s a real chance of a bounce here, but having said that, there’s a lot of fear out there about the Bank of Japan. I think longer term, the Bank of Japan has very limited options, but it is an interesting turnaround.
So, I’ll be watching this today to see how it plays out. We can see that it is getting pretty aggressive. I think somebody’s trying to keep this from popping higher based on the action that I see right now. That being said, if we take out the top of this candlestick, that’d be pretty bullish.
USD/CAD Technical Analysis USD/CAD price chart showing price at 1.38654, bouncing sharply above the 200 EMA (1.38508). Source: TradingView The dollar against the Canadian dollar is just screaming higher. Not a huge surprise; there are a lot of things working against Canada right now, not the least of which is the United States. Canadian employment came in at -41,000 as opposed to the supposed addition of 15,000, so that’s a huge miss for Canada; it’s a huge gain for the United States. The trade war going on at the same time, of course, has major ramifications as well. I am bullish, looking at short-term pullbacks as buying opportunities.
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Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.
USD/JPY started a major decline from the 160.40 zone. It traded below a key bullish trend line with support at 159.70 on the 4-hour chart. WTI Crude Oil prices could gain bullish momentum if it surpasses $92.65. EUR/USD is showing positive signs above the 1.1580 support. USD/JPY Technical Analysis The US Dollar struggled to stay above 160.00 against the Japanese Yen. USD/JPY traded below 159.50 and 158.80 to enter a bearish zone.
Looking at the 4-hour chart, the pair traded below a key bullish trend line with support at 159.70. The bearish momentum gained strength after there was a close below 158.00, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour).
The pair even tested the 155.25 support zone. A low was formed at 155.29, and it is now consolidating losses. On the upside, it could face resistance near the 23.6% Fib retracement level of the downward move from the 160.39 swing high to the 155.29 low at 156.50.
The next major resistance might be 157.25. A close above 157.25 could start another steady increase. In the stated case, the bulls could aim for a move to 157.85 and the 50% Fib retracement level.
If there is another decline, the pair might find bids near 155.65. The first major support could be near 155.25. A downside break and close below 155.25 might start a major leg down. In the stated case, the bears could aim for a move to 154.40.
Looking at WTI Crude Oil prices, the price gained bullish pace, and the bulls could now aim for a move toward the $95.00 level.
Upcoming Key Economic Events:
US nonfarm payrolls for August 2026 – Forecast 56K, versus -23K previous. US Unemployment Rate for August 2026 – Forecast 4.1%, versus 4.1% previous.
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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.
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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.
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).
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Gold (XAU/USD) extends its rebound on Thursday after slipping below $4,300 to a nearly four-week low on the previous day. A sharp rally in the Japanese Yen (JPY) weighs on the US Dollar (USD), helping the precious metal regain ground. At the time of writing, XAU/USD trades around $4,425, up 0.87% on the day.
The Yen strengthens across the board for the second consecutive day. USD/JPY fell nearly 1% on Wednesday and is down around 1.50% at press time, trading near 156.35, its lowest level since August 3. The rapid move has raised speculation over another round of currency intervention or a rate check. However, Japanese authorities have not confirmed either.
The US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 99.26, near a one-week low, after reaching 99.86 on Wednesday, its highest level since August 14.
A weaker US Dollar is generally positive for Gold. Still, it may not be enough to drive a stronger recovery in the yellow metal, as several near-term headwinds remain in place, even though the longer-term outlook stays supported by strong central bank purchases and investment demand.
Government Bond yields have climbed to multi-year highs across major economies as fiscal and inflation concerns deepen. Elevated Oil prices linked to the war in the Middle East are also adding to inflation expectations. The benchmark 10-year US Treasury yield trades around 4.78% after pulling back modestly from 4.81%, its highest level since October 2023. Rising yields increase the opportunity cost of holding non-yielding assets such as Gold.
Hawkish Federal Reserve (Fed) expectations pose an additional challenge, as Gold typically performs better when interest rates are low. According to the CME FedWatch Tool, traders are pricing in around a 60% chance that the US central bank will raise interest rates at its September 15-16 meeting.
Taken together, these factors could make it difficult for Gold to attract strong buying interest. Buyers may also avoid placing aggressive bullish bets ahead of Friday’s United States Nonfarm Payrolls (NFP) report, which could significantly influence expectations for the Fed’s next policy move.
Thursday’s US economic calendar features the weekly Initial Jobless Claims and the August ISM Services Purchasing Managers Index (PMI).
Technical analysis: XAU/USD tests $4,450 as buyers regain ground
XAU/USD holds above the 50-day and 100-day Simple Moving Averages (SMAs), keeping the near-term outlook constructive. The Relative Strength Index (RSI) on the daily chart stands near 52, indicating neutral momentum. Meanwhile, the Moving Average Convergence Divergence (MACD) displays red histogram bars and remains in negative territory, suggesting that recovery attempts could remain choppy while Gold trades below the longer-term trend barrier at the 200-day SMA.
On the upside, immediate resistance is located at the horizontal level of $4,450, followed by the 200-day SMA at $4,533 and the $4,700 mark. On the downside, the psychological level of $4,400 offers initial support ahead of the 100-day SMA at $4,357 and the 50-day SMA at $4,231. A deeper decline could bring the horizontal support level of $4,000 into focus.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Gold FAQs Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
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.
After waiting for months and years for some real JPY strength, are we really seeing it, or is it temporary?
The big move started yesterday when a Bank of Japan board member said that a 25 basis point rate increase is “not necessarily set in stone” and that back-to-back rate hikes are possible.
In today’s Market Outlook, let’s take a look at Forex trading on the Dow Jones Industrial Average, WTI Crude Oil, EURUSD, EURCAD, NZDJPY, and USDJPY.
So? We have seen many attempts at Yen strength, and we need to see if this one sticks.
It hasn’t in the past.
Meanwhile, on USD/JPY, we see an oversold stochastic oscillator and strong indications of strong bearish trends on the ADX.
Of course, this is no guarantee of a reversal to the upside, and we see key levels of support at 157 and 156 yen.
Take a look at all your JPY pairs as we see similar price action.
On NZDJPY, however, we are in a ranging market on the daily chart with clear levels of support.
Watch your technicals on all JPY pairs and the news, of course.
The BoJ will be meeting this month, 18 September, to decide on the interest rates, so expect volatility between now and then.
Yesterday, we saw the BoC keep interest rates on hold, but during the press conference there was talk of rate rises, so we saw CAD strength.
On the EURCAD daily chart, we see that we are in a ranging market with key support and a possible descending triangle.
On lower time frames, we will look for the reversal.
But watch tomorrow for Canadian Employment figures and the US Non-Farm Payrolls.
USD is still out of kilter from last week’s remarks by the new Fed chair, and we see EURUSD settling back into a downtrend that started a couple of weeks ago.
Again, check your USD and CAD charts and watch out for tomorrow’s Employment reports and NFPs.
We see a pullback in the price of oil as the White House is saying the latest campaign against Iran won’t last too long.
But, in the next breath, there was talk of further strikes.
The moral of the story is, be careful and watch your risk management.
If you are following the US indices, watch out for the NFPs tomorrow and keep an eye on the Dow Jones Industrial Average, where we see price at the lower trend line and technical signals of a potential reversal.
Buy yen by selling USD/JPY (e.g., FX spot or USD/JPY CFD). BoJ hike odds are near-certain for Sept 18, Japan yields are already up, and the pair is technically broken (below 50/100-day EMAs after a rising wedge/bearish reversal). Expect continued grind lower toward 155.25, with momentum if NFP doesn’t re-ignite USD strength.
Key Risk: Fed hikes more than expected (or NFP is strong), widening the rate gap and forcing USD/JPY to bounce hard.
JPY carry unwind
Sell JPY carry risk via long JPY vs high-yield proxies: short USD/JPY and/or buy protection by selling JPY-funded risk (e.g., short JPY against NZD/AUD if available, or reduce exposure to JPY-funded EM/credit ETFs). The news raises the odds of a sustained BoJ tightening path, which makes carry trades less attractive and triggers forced unwinds.
Key Risk: Markets decide BoJ hikes are “one-and-done” while the Fed stays dovish, keeping the carry trade intact and limiting JPY gains.
The USD/JPY exchange rate dived to its lowest level in a month as the Japanese yen made a strong comeback. It dropped to 156.85, down over 4.40% from its year-high as investors predicted that the Bank of Japan (BoJ) will hike interest rates as soon as this month.
Markets are expecting the Bank of Japan to hike interest rates in its September 18 meeting. A Polymarket event contract has a 97.5% probability of this hike happening.
These odds have jumped after recent statements by senior BoJ officials, including Governor Kazuo Ueda and Deputy Governor Ryozo Himino. They have hinted that the bank will be comfortable implementing another rate hike as inflation has held steady this year.
The most recent data showed that the Tokyo CPI jumped 1.9% in August from 1.8% in the previous month. It has been in a steady increase since bottoming at 1.3% in May this year.
This trend will continue in the foreseeable future since the US and Japan have restarted their war. Iran carried out strikes against key US allies like Kuwait and Bahrain, leading to higher crude oil prices. Brent has jumped to over $95, while the West Texas Intermediate (WTI) has moved to $91.
Japan is highly exposed to the events in the oil market because it imports from the Middle East, including countries like Saudi Arabia, UAE, Kuwait, and Qatar. Rising oil prices mean that inflation will continue rising in the coming months.
The rising BoJ hike odds comes at a time when Japan’s bond yields have soared to the highest level in years. The ten-year yield rose to 3.03%, much higher than the year-to-date low of 2.045%.
Similarly, the 30-Year rose to 4.20% before falling to 4.068% today as the odds of BoJ rate hike rose.
The challenge for the Japanese yen, however, is that the Federal Reserve is also expected to hike interest rates in the coming meetings. Odds of the Fed hiking rates in September jumped to 60% on Polymarket.
A Fed and BoJ hike would leave the differential where it is today, making the Japanese yen a popular carry trade funding currency. A carry trade is a situation where investors borrow from a low-interest-rate currency and then invest it in a high-interest-rate one.
The next important catalyst for the USD/JPY pair is the upcoming US nonfarm payrolls data. Economists expect the economy to have added between 50k and 80k jobs in August after shedding 23k a month earlier.
USDJPY chart | Source: TradingView
The daily chart shows that the USD/JPY crashed to a low of 156, its lowest level since August 7. This retreat happened after the pair formed a rising wedge pattern, which is made up of two ascending and converging trendlines. This pattern is one of the most common bearish reversal sign in technical analysis.
The wedge was part of bearish pennant pattern, which happens after an asset makes a big dive. It has now remained below the 50-day and 100-day Exponential Moving Averages (EMA).
Therefore, the pair will likely continue falling, potentially to the key support level at 155.25. A move below that support will point to more downside.
The USD/JPY currency pair dropped sharply, hitting near four-week lows after meeting resistance at the 160.00 level Heightened intervention risks from Japanese authorities, rising Bank of Japan interest rate expectations, and a mild retreat in U.S. Treasury yields drove the dollar's sell-off Analysts view the sudden dip as a healthy, risk-management correction under the shadow of intervention rather than a permanent structural trend reversal The USD/JPY currency pair has dropped two days in a row, unable to hold above the important 160.00 level. During Asian trading, the exchange rate even touched nearly four-week lows, losing its earlier upward drive.
This quick drop raises the question on whether this is a true trend reversal or just a brief technical correction.
Why the Dollar Has Lost Its Grip The US dollar is under pressure from two sources. Their combined effect is proving stronger than either factor on its own.
On the Japanese side, traders are closely watching for any signs of intervention by authorities, as rate checks often precede such action. This speculation pairs with growing expectations of Bank of Japan (BoJ) interest rate hikes, both factors strengthening the yen.
Many analysts also note the yen’s strength reflects these shifting signals from the BoJ, suggesting the market isn’t just reacting to the dollar.
The interest rate gap still holds weight. US policy rates remain higher than Japan’s, a situation that has historically backed carry-trade strategies and kept the dollar strong against the yen.
But if the BoJ tightens policy, that gap could narrow. This, combined with intervention risks, has weakened the dollar’s grip on the pair.
Is this An Impending Reversal or A Temporary Disruption? Technically, a break below intermediate moving average support levels signals more downside. Should Japanese yields keep rising while US economic data weakens, the shrinking interest rate gap might push the pair back toward 157.00. The constant threat of intervention pretty much caps any big gains past the psychologicaly important160.00 level.
However, a bullish view suggests that even after the recent sharp drop, core fundamental factors still back the US dollar.
Unless US labor market data worsens significantly or the Federal Reserve hints at steeper rate cuts, the significant yield difference between US and Japanese debt will probably keep drawing carry-trade interest. Without direct market intervention from Tokyo, buyers might step back in around key support levels.
The interplay of policy differences and intervention risks will determine if the US dollar regains its prior strength or the yen keeps its firm footing.
What caused the recent sharp drop in USD/JPY?
The USD/JPY pair took a steep dive right after touching 160.00. That happened as the Bank of Japan made some hawkish comments, and people began talking about Japanese officials possibly stepping in or checking rates.
How significant is the 160.00 level for this pair?
The 160.00 level acts as a significant psychological barrier. It’s a point that always grabs the attention of speculators and Japanese policymakers alike.
How are domestic policy expectations in Japan contributing to Japanese yen strength against the dollar?
Investors are growing more confident the Bank of Japan will hike interest rates before long. This has pushed up yield expectations, which in turn gives the yen some foundational support.
The USD/JPY pair remains under intense selling pressure for the second straight day and plummets to a nearly four-week low, around the 157.25-157.20 region during the early European session on Thursday.
Traders remain on high alert amid speculation that authorities had conducted a rate check, which signals the possibility of an intervention to support the Japanese Yen (JPY). Furthermore, more hawkish repricing of Bank of Japan (BoJ) rate hike expectations provides a strong boost to the JPY. This, along with a broadly weaker US Dollar (USD), is seen exerting downward pressure on the USD/JPY pair.
From a technical perspective, Wednesday's failed attempt to conquer the 200-period Simple Moving Average (SMA) on the 4-hour chart and the subsequent decline favor bearish traders. Moreover, the Moving Average Convergence Divergence (MACD) indicator is negative, while the Relative Strength Index (RSI) sits in oversold territory, suggesting persistent downside pressure on the USD/JPY pair.
Hence, some follow-through weakness below the 157.00 mark, towards testing the 156.60-156.50 horizontal support, looks like a distinct possibility. The downward trajectory could extend further toward challenging the August monthly swing low, around the 155.25-155.20 region, with some intermediate support near the 156.00 round figure.
On the topside, any attempted recovery is likely to attract fresh sellers near 158.00, which should cap the USD/JPY pair near the 158.40-158.50 pivotal resistance. The momentum might then lift spot prices beyond 159.00, towards the 200-period SMA, around the 160.00 psychological mark. Acceptance above the latter would be needed to ease the current bearish bias and signal a more sustainable rebound.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/JPY 4-hour chart
Japanese Yen Price This week The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies this week. Japanese Yen was the strongest against the New Zealand Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.20%0.33%-1.73%-0.60%-0.09%1.17%0.16%EUR0.20%0.53%-1.52%-0.41%0.10%1.32%0.38%GBP-0.33%-0.53%-2.14%-0.93%-0.43%0.79%-0.24%JPY1.73%1.52%2.14%1.07%1.66%2.83%1.82%CAD0.60%0.41%0.93%-1.07%0.52%1.75%0.70%AUD0.09%-0.10%0.43%-1.66%-0.52%1.22%0.19%NZD-1.17%-1.32%-0.79%-2.83%-1.75%-1.22%-1.02%CHF-0.16%-0.38%0.24%-1.82%-0.70%-0.19%1.02% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
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.
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
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.
View related analysis:
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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.
The USD/JPY pair touches a fresh high since July 31 on Wednesday, though it lacks follow-through buying and remains below 160.50 through the Asian session.
The Japanese Yen (JPY) continues its relative underperformance on the back of fiscal concerns stemming from a surge in bond yields, which increases the cost of servicing Japan's massive debt pile. The US Dollar (USD), on the other hand, climbs to a nearly three-week top as oil-driven inflation fears reaffirm bets for a September interest rate hike by the Federal Reserve (Fed) amid escalating US-Iran tensions.
Furthermore, the persistent wide US-Japan interest rate differential keeps the so-called JPY carry trade active and backs the case for a further near-term appreciating move for the USD/JPY pair. However, expectations for faster policy tightening by the Bank of Japan (BoJ) cap the upside as traders await the release of the US Nonfarm Payrolls (NFP) report on Friday.
From a technical perspective, momentum indicators remain constructive, with the Relative Strength Index (RSI) hovering in the mid-60s and the Moving Average Convergence Divergence (MACD) line holding slightly positive. This hints that buyers retain control and suggests that the underlying demand is still present despite the recent consolidation. The USD/JPY pair is looking to build on its strength beyond the 200-period Simple Moving Average (SMA) on the 4-hour chart.
Meanwhile, the 61.8% Fibonacci retracement level of the sharp corrective decline from a four-decade high, at 160.64, could act as the first notable topside barrier, capping immediate upside. A clear break above would open the way toward the 78.6% level at 162.10, with the July swing high around 163.96 standing as a more distant resistance, where bullish pressure could begin to fade.
On the downside, initial support aligns at the 50.0% Fibo. retracement at 159.62, creating a cushioning zone if the USD/JPY pair pulls back. A deeper slide would expose subsequent supports at the 38.2% retracement around 158.59 and then the 23.6% Fibo. level near 157.32.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
USD/JPY 4-hour chart
Japanese Yen Price Last 30 days The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies last 30 days. Japanese Yen was the strongest against the New Zealand Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.24%-0.04%1.91%-0.66%-1.35%1.08%0.80%EUR0.24%0.22%2.21%-0.37%-1.01%1.35%1.05%GBP0.04%-0.22%1.62%-0.62%-1.23%1.13%0.83%JPY-1.91%-2.21%-1.62%-2.45%-3.06%-0.69%-1.00%CAD0.66%0.37%0.62%2.45%-0.61%1.81%1.46%AUD1.35%1.01%1.23%3.06%0.61%2.38%2.09%NZD-1.08%-1.35%-1.13%0.69%-1.81%-2.38%-0.30%CHF-0.80%-1.05%-0.83%1.00%-1.46%-2.09%0.30% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
USD/JPY eyes a breakout while AUD/USD and NZD/USD face downside setups as rising US yields support the dollar. See key forex levels to watch.
USD/JPY
+0.22%
USD/JPY ForecastAUD/USD
-0.31%
AUD/USD ForecastNZD/USD
-0.36%
NZD/USD Forecast
USD/JPY Technical Analysis
USD/JPY trades at 160.15, pushing above the 160.00 level and both converging EMAs near 159.50, after trending higher from the Aug 28 lows. Source: TradingView. The US dollar against the Japanese yen is a pair that I watch all the time. I actually have longer-term buy-and-hold positions in this, but I may be adding to this if we can break to a fresh new high somewhere around 160.33.
This is a market that I have no interest in shorting because of the interest rate differential, but there is a little bit of intervention risk here. For myself, I’ve been long of this pair for months, so this is an addition to what I already have been doing. For short-term trading, it is a viable potential breakout play. I would keep an eye on that 159.8 level, though. A breakdown below that level could signify some type of shift in momentum.
AUD/USD Technical Analysis
AUD/USD trades at 0.7144, falling below the converging 50 and 200 EMAs near 0.7156 and the 0.7150 level after a sharp selloff. Source: TradingView. The Australian dollar is a pair that I’m watching closely. If we can break down below the 0.7130 level, I might start shorting for a small move, maybe down to about 0.71, with a stop loss above 0.7160. This is an interest rate play, and the US dollar, of course, is seeing higher rates, while Australia is as well, but it’s a different ratio; it’s a different amount. The situation still favors the US dollar as far as that is concerned.
NZD/USD Technical Analysis NZD/USD drops to 0.5894, breaking below the 0.5900 level and both EMAs after declining from the 0.5980 area. Source: TradingView. The New Zealand dollar, same story. I either sell a break below the 0.5885 level, or I sell a rally that shows signs of exhaustion near the 0.5915 level. I’ll be watching this closely. The interest rate differential still favors the US dollar, and I think the real support is probably closer to the 0.5870 level. So maybe a 20-pip move. If we get a little bit of a rally and signs of exhaustion, that might open up more of like a 40-pip move.
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Chris is a proprietary trader with more than 20 years of experience across various markets, including currencies, indices and commodities. As a senior analyst at FXEmpire since the website’s early days, he offers readers advanced market perspectives to navigate today’s financial landscape with confidence.
Preview: Westpac sees RBNZ hiking OCR to 2.75% tomorrow, data dependent from thereMOF official: Katayama, Bessent talks covered FX intervention, fiscal policyJapan finmin Katayama and Bessent affirm need for orderly yen movesChina private PMI beats forecast, longest upturn in five years. AUD support.China data: RatingDog Manufacturing PMI (August 2026) 51.5 vs. expected 50.9, prior 50.9TD Securities sees gold risk to 4200 near term, 5350 target by 2027UBS says 3 reasons the Venezuela oil deal wont move prices much, Hormuz still keyJapan manufacturing PMI hits 54.9 as new orders surge most since 2018New report shows scale of China's state-backed equity market support, State capital and buybacksPBOC sets USD/ CNY central rate at 6.7809 (vs. estimate at 6.7170)Oil Shock Pushes Yields Higher as Bitcoin Resists and Gold WeakensGoldman CEO flags Middle East, tariffs as headwinds to solid US growthDark transits and tanker relays: Oil producers workarounds to keep oil moving past HormuzBessent met Ueda, Katayama at G20, pushed for BOJ hikes, NHK reportsInflation? You want inflation? UK shop prices rise at fastest pace since 2024Tanker struck by three projectiles exiting Strait of Hormuz, UKMTO warnsMonday catch up in preparation for Asia open: Oil surges on Iran strikes, hawkish Warsh lifts dollar, yields, hike oddsUS Army Secretary Driscoll resigns after months of friction with HegsethExplainer: China's four PMIs, why they don't always agree, and how to trade themICYMI: Bessent lists reasons Fed could skip a September hike despite Warsh remarksinvestingLive Americas FX news wrap 31 Aug: The USD moves lower. USD corrects after Warsh's hawkish speech at Jackson HoleUS broader indices close lower on the day. Nasdaq 100 closes marginally higherSummary:
Oil remains underpinned after Monday's gains, with President Trump vowing to hit Iran hard in response to its retaliation, and reports of a Saudi VLCC halted after being struck by projectiles in the Strait of Hormuz.US Army Secretary Dan Driscoll has resigned after months of tension with Defense Secretary Pete Hegseth, according to the Wall Street Journal.Gold is little changed below USD 4,450/oz following a quiet prior session and amid recent upside in yields.China's RatingDog Manufacturing PMI rose to a two-month high of 51.5 in August from 50.9 in July, with new orders and exports accelerating, a ninth straight month of expansion and a positive signal for AUD as a China proxy.Japan's S&P Global Manufacturing PMI rose to 54.9 in August from 54.5 in July, an eighth straight month of improvement, with new orders growing at their fastest pace in over eight and a half years on AI and semiconductor demand, though this missed the 55.1 forecast.South Korea's S&P Global Manufacturing PMI eased to 52.3 in August from 53.1 previously.Australia's net exports contributed 0.1 percentage points to Q2 GDP, following separate data showing underlying government demand and inventories contributed 0.33 percentage points to Q2 growth.Treasury Secretary Bessent said he believes Japan will act to strengthen the yen and that markets are pricing in a BOJ hike, after meeting BOJ Governor Ueda and Japan's Finance Minister Katayama at the G20; USDJPY stood near 159.75, close to the 160 level associated with intervention risk.Katayama separately confirmed with Bessent that orderly yen and FX rates are crucial for global financial stability and that joint intervention remains significant, while declining to comment on current yen levels.The US dollar held slightly higher against most major currencies.A new report showed the scale of China's state-backed equity market support, with SASAC and Chengtong raising A-share holdings by more than 60 billion yuan in 2026, part of a wider buyback push covering 1,051 listed companies with proposed buybacks exceeding 220 billion yuan, according to the China Association for Public Companies.The Nikkei 225 traded off earlier lows and briefly turned positive, with headwinds from higher yields. The KOSPI declined mildly amid light newsflow and indecisive performance among tech heavyweights. The Hang Seng fell around 1% while the Shanghai Composite rose 0.2%, with mainland shares cushioned by the stronger than expected China PMI data. Middle East news flow was relatively light through the session, though oil prices remained underpinned after Monday's gains, when a US strike on Iranian rocket launchers and a subsequent Iranian retaliation drove crude higher. President Trump has vowed to respond forcefully to Iran's retaliation, and further support came from reports that a Saudi VLCC was halted after being struck by projectiles in the Strait of Hormuz, extending the pattern of tanker incidents in the waterway.
Separately, US Army Secretary Dan Driscoll has resigned following months of tension with Defense Secretary Pete Hegseth, according to the Wall Street Journal.
Gold was little changed below the USD 4,450 an ounce level, following an uneventful prior session and alongside the recent upside in bond yields.
It was a busier day for economic data, with the focus on China's private sector manufacturing survey. The RatingDog China General Manufacturing PMI rose to a two-month high of 51.5 in August from 50.9 in July, with new orders and export growth both accelerating. The reading marked a ninth consecutive month of expansion and was seen as a positive signal for the Australian dollar given its role as a China proxy currency.
In Japan, the S&P Global Manufacturing PMI rose to 54.9 in August from 54.5 in July, an eighth consecutive month of improvement, with new orders expanding at their fastest pace in more than eight and a half years on strong AI and semiconductor related demand, though the reading fell short of the 55.1 forecast. South Korea's equivalent survey eased to 52.3 in August from 53.1 previously.
In Australia, net exports contributed 0.1 percentage points to second quarter GDP, following data released a day earlier showing underlying government demand and inventories contributed a further 0.33 percentage points to growth over the same period.
On the currency side, Treasury Secretary Scott Bessent said he believes Japan will act to strengthen the yen and that markets are pricing in a Bank of Japan rate hike, following meetings with BOJ Governor Kazuo Ueda and Japan's Finance Minister Satsuki Katayama at the G20 in Asheville. USDJPY stood near 159.75, close to the 160 level that has previously been associated with a heightened risk of intervention. Katayama separately confirmed with Bessent that orderly yen and broader FX rates are crucial for the stability of global financial markets, and that the two sides share an understanding on the significance of joint intervention, while declining to comment on whether she considers current yen levels to be in order. The US dollar held slightly higher against most major currencies through the session.
A new report also highlighted the scale of state-backed support flowing into Chinese equities, with the State-owned Assets Supervision and Administration Commission and China Chengtong Holdings Group having raised their combined A-share holdings by more than 60 billion yuan so far in 2026. That figure sits within a broader buyback push covering 1,051 listed companies with proposed buybacks exceeding 220 billion yuan, according to a report from the China Association for Public Companies.
Regional equity markets were mixed. The Nikkei 225 traded off its earlier lows and briefly turned positive, despite headwinds from higher yields. The KOSPI declined mildly amid light news flow and indecisive performance among the index's tech heavyweights. In Hong Kong and mainland China, the Hang Seng fell around 1% while the Shanghai Composite rose 0.2%, with mainland shares cushioned by the stronger than expected Chinese manufacturing PMI data released earlier in the session.
US Nonfarm Payrolls → USD/JPYFed Chair Kevin Warsh struck a hawkish tone at Jackson Hole, stressing that progress toward the 2.0% inflation target remains modest and reaffirming price stability as the Fed’s primary mandate. Markets responded by repricing the odds of a 25bps September hike to more than 50%, sending USD/JPY above the key 159.50 resistance toward the 160.00 psychological barrier.
However, the bulls failed to clear the 50-day EMA as the risk of FX intervention continues to hang in the background. At the same time, Warsh’s preference for data dependency over forward guidance may encourage thinner liquidity ahead of Friday’s US Nonfarm Payrolls.
Consensus expects 58k new jobs following July’s 23k decline, an unchanged 4.1% unemployment rate, and wage growth easing to 3.0% y/y from 3.2%. A downside surprise could be partly cushioned by safe-haven flows if US-Iran military tensions escalate further. Therefore, barring intervention, attention remains firmly on the 160.00 area, with a sustained break potentially opening the way toward 161.00 and then up to 162.00.
RBNZ Rate Decision → NZD/USDThe Reserve Bank of New Zealand takes center stage on Wednesday (02:00 GMT), with markets fully pricing in a back-to-back 25bps hike to 2.75%. Above-target inflation keeps hawkish forward guidance on the table, as futures markets price in an additional hike by year-end.
A hawkish policy guidance could see NZD/USD pivot off its 20-day SMA near 0.5900 to test the key 0.5990 horizontal resistance level established in May. However, the recent increase in the unemployment rate to 5.6% and anchored inflation expectations slightly above 2% may prompt the RBNZ governor to favor a gradual tightening pace. Considering geopolitical risks, which favor the US dollar, the pair could face a rocky path ahead. On the downside, fresh selling might be waiting near 0.5890.
US-Iran Conflict → GoldGold plunged to 4,396 following Warsh’s speech as the US 10-year Treasury yield surged above 4.70%, with shorter-term yields rising even faster.
Although gold remains on track for a positive monthly close, currently establishing a footing near its 20-day SMA, Friday’s sharp decline reinforces the risk of a short-term bearish pullback. Technically, the bears need a sustained break below 4,300 to trigger deeper selling towards 4,000.
Beyond the NFP data, markets will also monitor the escalating US-Iran conflict after the US attacked Iran’s Larak Island and Iran retaliated with strikes against US bases in Jordan and UAE. President Trump’s AI-generated video depicting fires on Kharg Island further suggests that Washington remains willing to combine military pressure with sanctions to force Tehran to make concessions over its nuclear program and the Strait of Hormuz.
Against this backdrop, gold has recently traded more like a risk asset than a traditional safe haven. Without renewed US fiscal or debt concerns or a potentially disappointing jobs report, elevated real yields could keep bullion vulnerable to further downside momentum.
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The US Dollar (USD) is down 0.3% to near 159.65 against the Japanese Yen (JPY) during the European trading session on Monday. The USD/JPY pair declines as the Japanese currency outperforms its peers on hopes of support from the United States (US)-Japan joint intervention.
Japanese Yen Price Today The table below shows the percentage change of Japanese Yen (JPY) against listed major currencies today. Japanese Yen was the strongest against the Australian Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.15%-0.03%-0.26%-0.14%0.04%-0.05%-0.14%EUR0.15%0.10%-0.09%0.00%0.15%0.11%0.00%GBP0.03%-0.10%-0.19%-0.10%0.04%-0.00%-0.08%JPY0.26%0.09%0.19%0.10%0.29%0.22%0.14%CAD0.14%-0.01%0.10%-0.10%0.19%0.12%0.02%AUD-0.04%-0.15%-0.04%-0.29%-0.19%-0.06%-0.11%NZD0.05%-0.11%0.00%-0.22%-0.12%0.06%-0.08%CHF0.14%-0.01%0.08%-0.14%-0.02%0.11%0.08% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Japanese Yen from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent JPY (base)/USD (quote).
Yen intervention in focusAnalysts at Scotiabank flag that the recent “defensive price action is notable, and somewhat worrisome for policymakers at the BoJ, as well as officials at the MoF,” particularly as media reports highlight “the aggregate $96.4bn intervention effort to support the yen from July 30 to August 26.”
US Treasury Secretary Scott Bessent stated that Washington would intervene with Japan to shore up the Asia-Pacific currency, if needed. These comments came after the US and Japan jointly intervened in late July, as USD/JPY jumped to a multi-decade high near 164.00.
Meanwhile, the US Dollar trades lower, with investors shifting their focus to a slew of US economic data, starting with ISM Manufacturing PMI for August and the JOLTS Job Openings data for July releasing on Tuesday.
As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades 0.16% lower to near 99.50.
USD/JPY Technical Analysis
In the daily chart, USD/JPY trades at 159.66. The pair holds a mildly bullish near-term bias as spot remains above the 20-day exponential moving average (EMA) at 159.55, suggesting ongoing demand on dips.
The Relative Strength Index (RSI) at 49.39 sits just below the 50 mark, hinting at consolidative conditions rather than overextended momentum, but still compatible with a gradual topside bias while price holds over the short-term EMA.
On the downside, the August 19 low at 158.05 is the key support level. Looking up, the major hurdle is the Friday high at 160.20, followed by the July 31 high at 160.88.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Japanese Yen FAQs The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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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The week in one sentence: speculative positioning shifted more constructively in the week to August 25. CAD short covering led the move, followed by a broad reduction in EUR shorts and renewed Gold buying. GBP and VIX positioning also improved, while JPY positioning deteriorated and WTI flows diverged from weaker prices.
The Canadian Dollar's (CAD) non-commercial net shorts shrank by over 36.5K contracts to about 121.5K contracts, marking the biggest weekly improvement since mid-December. In contrast, USD/CAD traded with respectable losses, with modest CAD rising as positioning improved. Furthermore, the net positioning increased to the 21st percentile.
EUR: Shorts retreat sharplySpeculative net shorts in the Euro (EUR) shrank by around 22.7K contracts to more than 36.3K contracts, the strongest weekly improvement since mid-April. EUR/USD advanced markedly, even surpassing the 1.1700 barrier for the first time since early May, confirming the more constructive flow, although net positioning remains near the 10th percentile of its five-year range.
JPY, AUD and commodities divergeSpeculators added nearly 10.4K contracts to their net short positioning of the Japanese Yen (JPY), even as JPY gathered extra pace and prompted USD/JPY to trade with modest losses. The Australian Dollar (AUD) net shorts widened by just 296 contracts, despite a solid performance from AUD/USD, which finally exceeded the 0.7100 barrier. WTI net longs increased by almost 1.4K contracts amid a decent drop in the price of the barrel. Coffee (KC1) speculative positioning increased marginally by 107 contracts alongside a humble price gain.
GBP and VIX: Confirmation strengthensNet positioning in the British Pound (GBP) improved by just over 10K contracts, while GBP/USD picked up strong upside traction well north of 1.3600 the figure. Speculators trimmed their VIX net shorts by roughly 11.3K contracts, mainly because the reduction of gross shorts more than offset the decline in gross longs; the aka “panic index” traded with a positive footing although meeting resistance around the 16.00 zone, indicating that price and positioning delivered a second confirmation signal.
Gold: Buying acceleratesGold net longs went up by more than 21.1K contracts to just over 243.3K contracts, the biggest weekly rise since June 2. The precious metal navigated with firm gains over the reporting week, confirming the stronger flow and lifting exposure to the 99th percentile of its five-year range.
Positioning Map: Gold reaches an extremeGold exposure sits near the 99th percentile, the clearest crowded long in the report. AUD exposure is also elevated near the 81st percentile. At the other end, EUR net positioning remains near the 10th percentile and WTI near the 13th, despite this week's modest increase in Oil longs.
US PCE and Tokyo CPI – USD/JPYEven though Kevin Warsh has argued against traditional inflation tracking, characterizing the central bank’s closely watched core PCE index as a "rough swag," investors will remain focused on upcoming releases. This includes July’s reading, due on Wednesday at 12:30 GMT, at least until the Fed officially clarifies its data-dependent framework.
Expectations point to a steady 3.3% y/y headline, with monthly growth nudging up to 0.2%. Despite recent CPI softness, July's FOMC minutes confirmed policymakers are keeping a hawk's eye on tariff risks, with markets pricing in a 25bps rate hike before year-end. An upside PCE surprise could fast-track those rate hike bets, offering USD/JPY the momentum needed to reclaim its 20-day EMA and challenge 159.50. Downside cushion remains firm above the 200-day EMA at 157.90, with 158.50 offering immediate support.
To spark a sustained USD/JPY sell-off, a hawkish shift from the Bank of Japan is essential. This puts Friday’s Tokyo CPI release, which is expected to cool to 1.7% y/y from 1.9%, firmly in the spotlight. Stronger-than-expected readings would bolster the case for a September BoJ rate hike, pushing the pair back down to test the pivotal 157.00–157.90 support zone, where a clean breakdown opens the door toward 155.00.
Jackson Hole symposium – GoldMarket attention shifts to the Jackson Hole Symposium on Thursday, headlined by Fed Chairman Kevin Warsh's speech on Friday. Warsh is expected to avoid explicit policy commitments, choosing instead to deemphasize forward guidance and speak more about AI-driven productivity gains.
Still, any commentary on the ballooning fiscal debt, Treasury-Fed dynamics, and the Fed’s balance sheet could take center stage after the US Treasury department’s bond intervention last week.
Overall, any shift in bond yield volatility is expected to directly feed into precious metals momentum. Technically, Gold’s recent rally cleared its 200-day SMA and 4,570 resistance, putting April’s high near 4,770 in sight. While overbought indicators hint at near-term consolidation, a clean breakout above 4,770 opens a blue-sky path toward 5,000. Adding fuel to the fire, potential new US sanctions on Iran keep geopolitical risk premiums bid.
Nvidia Q2 earnings – US100The last full week of August could be particularly important for global stock markets, with Nvidia’s Q2 earnings due on Wednesday after the market close. The AI giant is expected to report a staggering 97% increase in revenue to $91.7 billion, with data centers accounting for the bulk of sales. Earnings per share could also nearly double year-on-year to $2.08.
Investors will keep a close eye on Nvidia’s guidance after the company signed an important partnership with six major financial giants, including BlackRock, aimed at unlocking more than $500 billion in third-party private capital. Meanwhile, reports that China has eased restrictions on Nvidia’s H200 chips have also boosted optimism over the company’s performance in Asia.
Still, the key question is whether strong results will be good enough to ease concerns over the returns on mounting AI investment, echoed by Nvidia’s hyperscale partners such as Google, Microsoft and Amazon and trigger a new rally in the US100. The index, which failed to follow its US peers to fresh all-time highs, is currently seeking support near its 29,000 round level after its recent recovery stalled around 30,150.
DXY 210826 4h Chart U.S. Dollar Index continues its attempts to rebound as traders react to PMI reports. Manufacturing PMI declined from 53.9 in July to 53.2 in August, compared to analyst forecast of 53.9. Services PMI improved from 54.6 to 56.8, compared to analyst consensus of 54. Numbers above 50 show expansion. The reports indicated that U.S. economy remained in good shape.
In case U.S. Dollar Index stays above the support at 98.60 – 98.75, it will head towards the nearest resistance level, which is located in the 99.25 – 99.40 range. On the support side, a move below the 98.60 level will push U.S. Dollar Index towards the support at 97.85 – 98.00.
EUR/USD Remains Stuck Near 1.1700
EUR/USD 210826 4h Chart EUR/USD was mostly flat as traders focused on Euro Area PMI data. Manufacturing PMI improved from 51.9 in July to 52.8 in August, compared to analyst consensus of 51.8. Services PMI remained unchanged at 51.7, while analysts expected that it would decline to 51.5. The reports indicated that the European economy expanded despite high oil prices.
Currently, EUR/USD is trying to settle above the resistance level at 1.1685 – 1.1700. In case EUR/USD manages to settle above the 1.1700 level, it will head towards the next resistance level, which is located in the 1.1775 – 1.1790 range. RSI has recently moved into oversold territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
GBP/USD Gained Some Ground As Traders Focused On PMI Data GBP/USD 210826 4h Chart GBP/USD moved higher as UK Services PMI exceeded analyst expectations. The report showed that UK Services PMI improved from 52.1 in July to 52.8 in August, compared to analyst forecast of 51.8.
From the technical point of view, GBP/USD continues its attempts to settle above the resistance level at 1.3635 – 1.3650. If GBP/USD climbs above the 1.3650 level, it will head towards the resistance at 1.3720 – 1.3735.
USD/CAD Tested New Lows USD/CAD 210826 4h Chart USD/CAD remains under pressure as traders focus on the strong rally in precious metals markets. Gold climbed above the $4600 level, while silver moved above $69.00. Other commodity-related currencies are also moving higher in today’s trading session.
A successful test of the support level at 1.3735 – 1.3750 will open the way to the test of the next support at 1.3635 – 1.3650. On the upside, a move above the 1.3775 level will open the way to the test of the 1.3800 level. In case USD/CAD climbs above 1.3800, it will head towards the resistance at 1.3825 – 1.3840.
USD/JPY Moved Lower As Japan’s Inflation Rate Exceeded Estimates
USD/JPY 210826 4h Chart USD/JPY pulled back despite rising Treasury yields. The yield of 2-year Treasuries climbed above the 4.23% level, while the yield of 10-year Treasuries settled above 4.73%. Treasury yields are rising despite Bessent’s attempts to push them lower via verbal interventions.
Traders also focus on inflation data from Japan. Inflation Rate increased from 1.6% in June to 1.9% in July, compared to analyst forecast of 1.7%. Core Inflation Rate grew from 1.6% to 1.8%, in line with analyst estimates.
The nearest support level for USD/JPY is located in the 157.50 – 158.00 range. If USD/JPY declines below 157.50, it will head towards the next support at 155.00 – 155.50. On the upside, a move above the 50 MA at 159.15 will open the way to the test of the resistance level at 159.50 – 160.00.
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The US dollar has come under moderate pressure as long-term US Treasury yields have declined. Another factor has been the US Treasury Department’s decision to increase buyback operations for securities with maturities ranging from 10 to 30 years in an effort to support market liquidity. Against this backdrop, the 30-year Treasury yield fell by around 9 basis points to 5.19%.
The decline in yields has weakened one of the key sources of support for the dollar and has been particularly significant for USD/JPY, which remains highly sensitive to movements in the US bond market.
The recently released FOMC minutes provided a counterweight. The minutes revealed growing concerns among policymakers about inflation risks, with several officials favouring a rate hike as early as the July meeting. This kept the overall tone relatively hawkish. Although policymakers were divided over whether an immediate rate increase was necessary, inflation risks remain a central concern for the Federal Reserve, while future decisions will continue to depend on incoming economic data.
Today, markets will focus on a fresh batch of US economic figures. The Philadelphia Fed Manufacturing Index is expected to fall to 24.1 from 41.4, while initial jobless claims are forecast at 210,000. Weaker-than-expected figures could put additional pressure on the dollar, whereas resilient data may allow the currency to recover some of its recent losses.
For the Canadian dollar, commodity-price data will provide an additional catalyst. The Raw Materials Price Index (RMPI) is expected to decline by 1.8% following a 6.9% drop in the previous month, making the actual reading potentially important for the further direction of USD/CAD.
USD/JPY USD/JPY made several unsuccessful attempts to approach the key 160.00 resistance level before sharply retreating towards 158.00 as US Treasury yields declined.
If selling pressure on the dollar persists, the pair could move towards the 156.70–157.20 area. At the same time, a corrective rebound following yesterday’s decline could lift the pair towards 158.60–159.20.
Key events for USD/JPY:
today at 15:30 (GMT+3): Philadelphia Fed Manufacturing Index; today at 15:30 (GMT+3): US initial jobless claims; tomorrow at 02:30 (GMT+3): Japan national core Consumer Price Index (CPI).
USD/CAD USD/CAD remains in a broader downtrend following the formation of a “tower” pattern in early July. Yesterday, sellers tested the important 1.3800 support level.
A sustained break below yesterday’s low could open the way towards 1.3730–1.3760. If 1.3800 continues to hold as support, however, the pair could stage a recovery towards 1.3840–1.3870.
Key events for USD/CAD:
today at 15:30 (GMT+3): Canadian Raw Materials Price Index (RMPI); today at 17:00 (GMT+3): US Leading Economic Indicators; tomorrow at 15:30 (GMT+3): Canadian core retail sales.
Outlook USD/JPY and USD/CAD remain caught between opposing fundamental forces. Falling Treasury yields are weighing on the dollar, while the relatively hawkish tone of the FOMC minutes is limiting the scope for a deeper decline.
The market’s attention is now turning to the latest US economic data. Weaker figures could extend the dollar’s correction and increase downside pressure on USD/JPY and USD/CAD, while stronger-than-expected releases could restore support for the US currency and trigger a recovery in both pairs.
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Key Points:EUR/USD rallied as traders focused on U.S. bonds' buyback. GBP/USD climbed above 1.3600 as traders reacted to inflation data from the UK. USD/CAD declined towards the 1.3800 level as precious metals markets rallied.
In this article:EUR/USD
+0.78%
EUR/USD ForecastGBP/USD
+0.52%
GBP/USD ForecastUSD/CAD
-0.62%
USD/CAD ForecastUSD/JPY
-0.69%
USD/JPY Forecast
U.S. Dollar Retreats As Traders Focus On Bond Buybacks
DXY 190826 4h Chart U.S. Dollar Index is under strong pressure as U.S. Treasury announced that it would boost buybacks of longer-dated government debt.
The yield of 30-year Treasuries pulled back towards the 5.20% level as bond traders reacted to the announcement. The yield of 10-year Treasuries declined below the 4.67% level.
The American currency is losing ground as debt buybacks pushed longer-term yields lower.
The nearest support level for U.S. Dollar Index is located in the 98.60 – 98.75 range. In case U.S. Dollar Index manages to settle below the 98.60 level, it will head towards the next support at 97.85 – 98.00. It should be noted that RSI is in the oversold territory, so the risks of a rebound are increasing.
EUR/USD Soars After U.S. Treasury Decides To Boost Bond Buybacks EUR/USD 190826 4h Chart EUR/USD rallied as traders focused on U.S. Treasury decision to buy back bonds. The moved showe that Bessent was worried that longer-dated bond market will get out of control.
EUR/USD is moving towards the resistance level at 1.1685 – 1.1700. If EUR/USD manages to settle above the 1.1700 level, it will head towards the next resistance level, which is located in the 1.1775 – 1.1790 range.
GBP/USD Rallies As Traders Focus On UK Inflation Data GBP/USD 190826 4h Chart GBP/USD gained ground as traders focused on general weakness of the American currency. Traders also had a chance to take a look at inflation data from the UK.
Inflation Rate increased from 2.6% in June to 2.9% in July, in line with analyst consensus. Core Inflation Rate remained unchanged at 2.6%, while analysts expected that it would drop to 2.9%.
USD/CAD Tests New Lows
USD/CAD 190826 4h Chart USD/CAD pulled back as traders reacted to the strong rally in precious metals markets. Gold climbed towards the $4500 level, while silver moved towards $66.00. Other commodity-related currencies have also gained upside momentum in today’s trading session.
Currently, USD/CAD is trying to settle below the support level at 1.3825 – 1.3840. In case USD/CAD manages to settle below the 1.3825 level, it will head towards the next support, which is located in the 1.3735 – 1.3750 range. RSI has recently moved into oversold territory, but there is enough room to gain momentum in case the right catalysts emerge.
USD/JPY Moves Away From Weekly Highs USD/JPY 190826 4h Chart USD/JPY pulled back as traders focused on U.S. bonds’ buyback. The Japanese yen is fundamentally weak due to ultra-dovish policy of the Bank of Japan. Falling yields in the U.S. will put pressure on USD/JPY.
However, it remains to be seen whether buyback will provide major support to U.S. bond prices and pushes their yields to lower levels. Meanwhile, shorter-term U.S. Treasuries have found themselves under pressure. The yield of 2-year Treasuries climbed above the 4.19% level.
The nearest support level for USD/JPY is located in the 157.50 – 158.00 range. If USD/JPY manages to settle below the 157.50 level, it will head towards the next support level at 155.00 – 155.50.
On the upside, a move above the 50 MA at 159.10 will push USD/JPY towards the resistance level at 159.50 – 160.00.
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Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
USD/JPY The US dollar against the Japanese yen has been a bit negative for the session, but when you zoom out, you can see it’s still very much overall in recovery against the Japanese yen since that intervention. I think we’re probably stuck in a consolidation area for a while; that makes sense. A lot of traders may be nervous about the Bank of Japan.
A Longer-Term Fundamental Conviction Trade For me, if it falls, I just buy more. It’s a longer-term fundamental conviction type of trade until something changes, and that something would take a lot. Ultimately, the interest rate differential is very wide, and you have a situation where the Japanese have their back against the wall.
So, something’s going to have to give here. We got a little bit sneak preview of that over the last several months. I’ve been long of this pair multiple times. A bounce here has me adding a small position onto an existing core position.
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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 precious metal could rise in tandem with Treasury yields. The BoJ’s accelerated tightening will support the yen. The new Fed Chair wants the markets to do the central bank’s job for him. If the number of supporters of his position increases, the chances of a rate hike in 2026 will fall, weakening the greenback. Recently, the US dollar has retreated amid concerns that the July FOMC meeting minutes will show that Kevin Warsh’s approach is working.
His passivity is one of the drivers behind the rally in long-term Treasury yields to their highest levels since 2007. Other reasons include concerns about the budget deficit, rising inflation due to the conflict in the Middle East, and the diversion of funds towards artificial intelligence. To finance AI-related expenditures, companies are issuing bonds, diverting capital from the Treasury market and raising Treasury yields.
Surprisingly, rising interest rates on debt are not preventing gold from continuing its climb. Even though there are occasional slumps, such as the one seen on 18 August, which was the sharpest fall in nearly a month, investors believe that the rise in Treasury bond yields has more to do with selloffs driven by fears over the budget deficit than with hopes for the strength of the US economy. Indeed, the Congressional Budget Office forecasts that debt service costs will rise from an average of 2.1% of GDP over the past half-century to 3.3% in 2026 and 4.6% in 2036. Concerns about US financial stability are helping the metal to rise.
Additionally, according to a Bank of America survey, the proportion of investors who consider gold undervalued has risen to its highest level since March 2023.
Other currencies have capitalised on the weakness of the US dollar. The bulls failed to break through the resistance level at 159.5 on USDJPY, and the pair retreated. According to Mizuho Financial Group, the Bank of Japan will raise its overnight rate from 1% to 1.25% as early as September, and will then accelerate the cycle of monetary tightening, taking a new step every three months rather than every six. The main reason for this is that borrowing costs remain negative, whilst inflation stands at 1.6%.
The yen is also being supported by the fact that yields on Japanese government bonds are rising faster than those on US bonds. They have reached their highest level since 1996. This is contributing to capital repatriation and a fall in the USDJPY exchange rate.
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The new Fed Chair wants the markets to do the central bank’s job for him. If the number of supporters of his position increases, the chances of a rate hike in 2026 will fall, weakening the greenback. Recently, the US dollar has retreated amid concerns that the July FOMC meeting minutes will show that Kevin Warsh’s approach is working.
His passivity is one of the drivers behind the rally in long-term Treasury yields to their highest levels since 2007. Other reasons include concerns about the budget deficit, rising inflation due to the conflict in the Middle East, and the diversion of funds towards artificial intelligence. To finance AI-related expenditures, companies are issuing bonds, diverting capital from the Treasury market and raising Treasury yields.
Surprisingly, rising interest rates on debt are not preventing gold from continuing its climb. Even though there are occasional slumps, such as the one seen on 18 August, which was the sharpest fall in nearly a month, investors believe that the rise in Treasury bond yields has more to do with selloffs driven by fears over the budget deficit than with hopes for the strength of the US economy. Indeed, the Congressional Budget Office forecasts that debt service costs will rise from an average of 2.1% of GDP over the past half-century to 3.3% in 2026 and 4.6% in 2036. Concerns about US financial stability are helping the metal to rise.
Additionally, according to a Bank of America survey, the proportion of investors who consider gold undervalued has risen to its highest level since March 2023.
Other currencies have capitalised on the weakness of the US dollar. The bulls failed to break through the resistance level at 159.5 on USDJPY, and the pair retreated. According to Mizuho Financial Group, the Bank of Japan will raise its overnight rate from 1% to 1.25% as early as September, and will then accelerate the cycle of monetary tightening, taking a new step every three months rather than every six. The main reason for this is that borrowing costs remain negative, whilst inflation stands at 1.6%.
The yen is also being supported by the fact that yields on Japanese government bonds are rising faster than those on US bonds. They have reached their highest level since 1996. This is contributing to capital repatriation and a fall in the USDJPY exchange rate.
Summary: Gold gains as dollar weakness, fiscal worries and rising Japanese yields support the metal and the yen, while Fed and BoJ policy expectations steer markets.
Key Points:EUR/USD tested multi-week highs as traders remained bullish. USD/CAD moved away from session lows as traders reacted to inflation data from Canada. USD/JPY remained stuck below the key resistance level as traders focused on Japan's GDP Growth Rate report.
EUR/USD
+0.13%
EUR/USD ForecastGBP/USD
+0.11%
GBP/USD ForecastUSD/CAD
-0.03%
USD/CAD ForecastUSD/JPY
+0.09%
USD/JPY Forecast
U.S. Dollar Tested New Lows
DXY 170826 4h Chart U.S. Dollar Index is losing some ground as traders reduce bets on hawkish Fed. Traders also focus on the NAHB Housing Market Index report for August. The report indicated that NAHB Housing Market Index increased from 34 in July to 35 in August, compared to analyst forecast of 33.
Currently, U.S. Dollar Index is trying to settle below the support level at 99.25 – 99.40. In case U.S. Dollar Index manages to settle below the 99.25 level, it will head towards the next support, which is located in the 98.60 – 98.75 range.
EUR/USD Tests Resistance At 1.1600 – 1.1615
EUR/USD 170826 4h Chart EUR/USD gained ground as traders focused on general weakness of the American currency. Treasury yields were mixed. The yield of 2-year Treasuries pulled back below the 4.17% level, while the yield of 10-year Treasuries settled above 4.70%.
The nearest resistance level for EUR/USD is located in the 1.1600 – 1.1615 range. in case EUR/USD manages to settle above the 1.1615 level, it will head towards the next resistance at 1.1685 – 1.1700. RSI has recently moved back into moderate territory, so there is plenty of room to gain momentum in case the right catalysts emerge.
GBP/USD Tests Multi-Week Highs GBP/USD 170826 4h Chart GBP/USD moved higher as traders remained bullish at the start of the week. Traders bet that Fed will leave the federal funds rate unchanged at the next meeting in September.
From the technical point of view, GBP/USD continues its attempts to settle above the resistance level at 1.3550 – 1.3565. If GBP/USD climbs above the 1.3565 level, it will head towards the next resistance, which is located in the 1.3635 – 1.3650 range.
USD/CAD Moves Away From Session Lows As Traders Focus On Canada’s Inflation Data USD/CAD 170826 4h Chart USD/CAD attempts to rebound from multi-week lows as traders react to inflation data from Canada. Inflation Rate increased from 2.8% in June to 3% in July, compared to analyst forecast of 2.9%. Core Inflation Rate grew from 2.1% to 2.3%, compared to analyst consensus of 2.2%.
If USD/CAD settles back above the 1.3880 level, it will head towards the nearest resistance at 1.3920 – 1.3935. On the support side, a successful test of the support at 1.3825 – 1.3840 will open the way to the test of the next support level at 1.3735 – 1.3750.
USD/JPY Is Mostly Flat As Japan’s GDP Growth Rate Misses Estimates
USD/JPY 170826 4h Chart USD/JPY remains stuck below the key resistance level at 159.50 – 160.00 as traders react to Japan’s GDP Growth Rate report. The report showed that GDP Growth Rate was +0.3% in the second quarter, compared to analyst forecast of +0.5%.
Traders are focused on Fed policy outlook and are worried about potential interventions from the BoJ. The Japanese yen is fundamentally weak due to the difference in interest rates, but recent interventions have made traders cautious.
If USD/JPY climbs above the 160.00 level, it will move towards the next resistance level at 161.50 – 162.00. A move above the 162.00 level will push USD/JPY towards the 164.00 level.
On the support side, a move below the 50 MA at 158.79 will open the way to the test of the nearest support level at 157.50 – 158.00.
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Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
USD/JPY found support at 155.25 and started a recovery wave.
A rising channel is forming with support near 158.40 on the 4-hour chart.
Gold failed to extend gains above $4,450 and might correct some gains.
Bitcoin remains below the key resistance at $65,500 and $66,650.
USD/JPY Technical Analysis
The US Dollar started a decent recovery above 156.00 against the Japanese Yen. USD/JPY climbed above 157.20 to move into a short-term positive zone.
Looking at the 4-hour chart, the pair almost tested the 50% Fib retracement level of the downward move from the 163.98 swing high to the 155.22 low. However, the bears seem to be active below 159.60.
The pair is also below the 100 simple moving average (red, 4-hour) and the 200 simple moving average (green, 4-hour). On the upside, the pair could face resistance near 159.60.
The next major resistance might be 160.50 and the 100 simple moving average (red, 4-hour). A close above 160.50 could start another steady increase. In the stated case, the bulls could aim for a move to 161.20.
Any more gains might open the door for a test of 162.00. If there is a fresh decline, the pair might find bids near 158.50. There is also a rising channel forming with support at 158.40.
The next major support could be near 158.00. The main support might be 157.20. A downside break and close below 157.20 might send the pair toward 156.50. Any more losses could open the door for a test of 155.25.
Looking at Gold, the bears are active below the $4,500 resistance, and they could aim for a downside correction in the near term.
Upcoming Key Economic Events:
US Retail Sales for July 2026 (MoM) – Forecast +0.1%, versus +0.2% previous.
Michigan Consumer Sentiment Index for August 2026 (Prelim) – Forecast 54.5, versus 55.2 previous.
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Japanese Yen Talking Points: It’s a cat and mouse game in USD/JPY as bulls are clawing back in the pair following the dual intervention two weeks ago. The pair had stalled just inside of 165 two weeks ago but bulls remained aggressive on pullbacks or at support, ultimately leading to the intervention order. But after the sell-off, is there a new line in the sand at 160, or is the BoJ going to react passively? Rumors of a BoJ rate hike in September have done little to deter buyers in the pair and inflation in Japan came in at 1.7%, so half of what just printed in the US at 3.4%. There’s not pressing demand for a rate hike right now other than to try to quell Yen weakness and markets seem to be sniffing that out already.
USD/JPY is up more than 400 pips from the lows of last week, and bulls are tip-toeing back into the pair. While there hasn’t been an emphatic breakout yet, there has been ardent defense of support and of recent that’s come in at higher-lows. This sets up for a dangerous backdrop, on both sides of the pair, as the carry remains positive for longs and the fundamental bias is still decisively-tilted against the Japanese Yen.
The 164/165 area is probably safe to assume as a hard line in the sand given that we’ve already seen an intervention at that price but perhaps the bigger question for now is whether the BoJ would respond to a test above 160.00 in USD/JPY. That’s the price that they defended back in April of 2024 and it was a level that got attention earlier in the year, leading into a ‘rate check’ from the US Treasury Department via the New York Federal Reserve.
Those normally happen from the Japanese side of the matter and the fact that the US Treasury Department and Treasury Secretary Scott Bessent were so interested in the matter is what makes our current situation so unique. Solo interventions have often failed, like the one in April of 2024. The BoJ buying yen and forcing a pullback into USD/JPY have, in essence, just created an opportunity for bulls to position-in at more favorable prices. But, historically, dual interventions have tended to show more success in stabilizing and even reversing exchange rates although there’s the very real question of funding from the US side as Scott Bessent’s approach two weeks ago came into question from Nick Timiraos of the Wall Street Journal, who Bessent later attacked and called him a ‘stenographer that relies on backroom gossip.’
Gossip and innuendo aside, like I said after the intervention long USD/JPY at 155.00 could make more sense as it seemed unlikely that we’d get an intervention there. And with the harboring expectation that the US will hike rates later this year there’s still rational for the carry trade, which means there’s still a need for hedges against JPY currency weakness.
For this week, the risk factor was US data and if that did show a cratering in inflation, then there could be rationale for longs to close, similar to episodes in November 2022 or 2023, or again in July of 2024. But that inflation remained well above target, even if below expectations for PPI and right at the expectation for CPI.
So, the question now is two-fold. The first is for how long might bulls be able to push? Traditionally this would be a gradual affair where buyers in the pair go for a little more and a little more until, eventually, they pose a breakout. It’s what happens after that matters as a failure from the BoJ to respond will lead to a stronger topside move as markets try to sniff out weakness. And secondly, if bulls do get beyond 160.00, are Bank of Japan officials standing by to try to swat down the move, similar to April of 2024?
At this point, a short-term ascending triangle can be argued in USD/JPY, which is a bullish breakout formation defined by horizontal resistance and a series of higher-lows. That high is showing below the 160.00 handle so as we go into late-week trade, we may see a push from bulls to get closer to that test of the big figure, and perhaps even a test beyond that, with the very real question as to whether policymakers from either economy will show more aggression this time.
USD/JPY Four-Hour Price Chart Chart prepared by James Stanley; data derived from Tradingview USD/JPY Beyond 160.00 The difficult part about interventions is often the subjectivity behind them. While USD/JPY broke out above 160 and ultimately stalled just below 165, it was the response after the FOMC meeting that ultimately compelled the BoJ to act.
And that response from markets that led to the intervention was one of persistence as a Fed-fueled dip was merely bought by bulls and even with USD weakness showing more prominently against the Euro or British Pound, USD/JPY still retained strength. It was the BoJ intervention later that night that began to shift matters and then the next morning, the US Treasury Department jumping in.
So, while 160.00 would be a logical place for a more aggressive defense, the fact of the matter is that we simply don’t know if that would be the line in the sand, because, after all, interventions are not ideal as it requires burning finite FX reserves to bid down an exchange rate that your own policy is encouraging.
And on the rate hike front, there’s not really pressing demand for that in Japan, where CPI is roughly half the level of that seen in the US. This, once again, speaks to the fundamental bias on the long side of the pair and it’s even more rationale for longs to continue accumulating save for the risk of intervention.
But, if we do see that test above 160 the next spot circled on my chart is 160.60, which is both a prior swing-high turned swing-low that’s confluent with the 61.8% Fibonacci retracement of the recent sell-off. And the 38.2% retracement of that move is what caught the lows after the CPI print yesterday, inviting bulls to jump back in on the trend.
Remember what happened in 2022 – when the BoJ wanted to defend 150 but they waited, and by the time they did intervene price was at 151.95. If 160 gets taken out, the next move can happen very quickly.
USD/JPY Daily Chart Chart prepared by James Stanley; data derived from Tradingview --- written by James Stanley, Senior Market Analyst, Global Macro
Key Points:EUR/USD moved higher as traders focused on U.S. economic reports. USD/CAD declined towards the support at 1.3920 - 1.3935 despite the pullback in precious metals markets. USD/JPY remained stuck near the 159.50 level.
In this article:EUR/USD
+0.01%
EUR/USD ForecastGBP/USD
-0.11%
GBP/USD ForecastUSD/CAD
-0.07%
USD/CAD ForecastUSD/JPY
+0.09%
USD/JPY Forecast
U.S. Dollar Is Losing Ground As Traders Focus On Producer Prices Data
DXY 130826 4h Chart U.S. Dollar Index continues its attempts to settle above the resistance level at 99.85 – 100.00 as traders focus on Producer Prices report.
The report indicated that PPI was unchanged on a month-over-month basis in July, compared to analyst forecast of +0.2%. Core PPI increased by +0.2%, compared to analyst forecast os +0.3%.
Today, traders also had a chance to take a look at the Initial Jobless Claims report. The report showed that 209,000 Americans filed for unemployment benefits in a week, compared to analyst forecast of 202,000.
In case U.S. Dollar Index manages to settle above the 100.00 level, it will head towards the next resistance level, which is located in the 100.50 – 100.65 range.
EUR/USD Moved Higher As Euro Area Industrial Production Beat Estimates EUR/USD 130826 4h Chart EUR/USD gained some ground as traders focused on the Euro Area Industrial Production report. The report showed that Industrial Production was unchanged in June, compared to analyst consensus of -0.1%.
The nearest support level for EUR/USD is located in the 1.1510 – 1.1525 range. In case EUR/USD manages to settle below the 1.1510 level, it will head towards the next support at 1.1435 – 1.1450.
GBP/USD Moved Lower Despite Strong GDP Data GBP/USD 130826 4h Chart GBP/USD pulled back despite the better-than-expected GDP Growth Rate report from the UK. The report indicated that UK GDP Growth Rate was +1.2% in the second quarter, compared to anlayst forecast of +1.1%.
Traders also focused on the Industrial Production and Manufacturing Production reports. Industrial Production declined by -0.2% month-over-month in june, compared to anlayst forecast of +0.1%. Manufacturing Production decreased by -0.5%, while anlaysts expected that it would decline by -0.2%.
A successful test of the support level at 1.3465 – 1.3480 will open the way to the test of the next support at 1.3335 – 1.3350. RSI is in the moderate territory, so there is plenty of room to gain additional downside momentum in case the right catalysts emerge.
USD/CAD Remained Stuck Near Support At 1.3920 – 1.3935 USD/CAD 130826 4h Chart USD/CAD moved away from session highs despite the pullback in precious metals markets. Gold declined towards the $4350 level, while silver settled back below $65.00. Other commodity-related currencies moved lower in today’s trading session.
Currently, USD/CAD is trying to settle back below the support level at 1.3920 – 1.3935. In case USD/CAD manages to settle below the 1.3920 level, it will head towards the next support level at 1.3825 – 1.3840.
USD/JPY Settled Near The 159.50 Level USD/JPY 130826 4h Chart USD/JPY remains stuck below the key resistance level at 159.50 – 160.00 as traders ignored the pullback in Treasury yields. The yield of 2-year Treasuries declined below the 4.15% level, while the yield of 10-year Treasuries settled below 4.65%.
Analysts expect that BoJ will raise rates at the next meeting in September, but these expectations do not provide support to the Japanese currency.
If USD/JPY moves above the 160.00 level, it will gain additional upside momentum and head towards the resistance level at 161.50 – 162.00. The key question is whether BoJ is ready to intervene again in case USD/JPY climbs above the psychologically important 160.00 level.
If you’d like to know more about how to trade forex, please visit our educational area.
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Vladimir is an independent trader, with over 18 years of experience in the financial markets. His expertise spans a wide range of instruments like stocks, futures, forex, indices, and commodities, forecasting both long-term and short-term market movements.
The US Dollar (USD) remains practically flat against the Japanese Yen (JPY) on Thursday, as fading hopes of a Federal Reserve (Fed) interest rate hike in September have undermined speculative demand for the Greenback. The USD/JPY pair maintains its near-term upside trend intact, yet with bulls capped below the 50% Fibonacci retracement of July’s sell-off, at the 159.50 area.
Analysts at TD Securities highlight that "near-term inflation risks still skew higher, but Fed can be patient," noting that "markets moderately lowered hike pricing, but we are not in the clear just yet."
In the currency space, TD observes that "USD traded weaker as in-line CPI release still preserved bearish USD momentum," underscoring that the latest data have done little to disrupt the prevailing negative bias toward the Dollar.
Technical Analysis: US Dollar remains bullish but momentum fades
From a technical perspective, USD/JPY holds a bullish near-term bias, although intra-day momentum indicators reflect fading upside traction. The 4-hour Relative Strength Index (14) at 57.22 leans constructive, but the Moving Average Convergence Divergence (MACD) indicator is flattening near the zero line, suggesting that buyers might be starting to give up.
The 50% Fibonacci retracement of late July's intervention-induced decline, at the 159.50 area, is capping upside attempts for now, closing the path towards the 160.00 psychological area, considered a line in the sand for Tokyo authorities, and the July 31 highs, near 160.90.
On the downside, the 38.2% Fibonacci retracement of the latest upswing at 158.53 is containing downside attempts for now. Further down, the August 4 and 5 lows, near 157.30, and the cluster around the 23.6% retracement at 157.28 are likely to challenge bears.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Price Today The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the New Zealand Dollar.
USDEURGBPJPYCADAUDNZDCHFUSD-0.09%0.02%-0.06%0.01%0.11%0.27%-0.22%EUR0.09%0.12%0.02%0.07%0.22%0.35%-0.12%GBP-0.02%-0.12%-0.06%0.00%0.11%0.24%-0.25%JPY0.06%-0.02%0.06%0.05%0.18%0.28%-0.18%CAD-0.01%-0.07%0.00%-0.05%0.12%0.26%-0.23%AUD-0.11%-0.22%-0.11%-0.18%-0.12%0.14%-0.34%NZD-0.27%-0.35%-0.24%-0.28%-0.26%-0.14%-0.46%CHF0.22%0.12%0.25%0.18%0.23%0.34%0.46% The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
USD/JPY is holding its rebound near the 160 level, testing the possibility of reclaiming its 2026 uptrend as the US Dollar Index maintains its broader bullish structure.
In contrast, US equity indices are showing signs of slowing momentum. The Dow Jones is consolidating near the upper boundary of its 2022-2026 ascending channel and below the 54,700 record resistance, while longer-term momentum is flashing overbought conditions last seen in 2018.
The divergence between a resilient US dollar and increasingly stretched equity markets raises the risk of a short-term pullback across risk assets, particularly as geopolitical uncertainty remains a dominant market driver heading toward Q4.
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.
The latest US CPI report showed headline inflation easing to the expected 3.4%, providing little reason for markets to materially reassess the Federal Reserve outlook. However, another inflation report and employment report are still due before the September Fed meeting, leaving the policy outlook sensitive to incoming data.
Meanwhile, geopolitical risks remain elevated. Crude oil continues to trade at elevated levels above the broader $70-$80 region, while the US dollar remains supported. Together, these conditions maintain short-term downside risks across major currency pairs, risk assets, and precious metals, while potentially supporting further upside across US dollar pairs.
Against this backdrop, USD/JPY and the Dow Jones are approaching technical levels that could help define the next directional move.
USD/JPY Price Outlook: Weekly Time Frame – Log Scale
Source: TradingView
USD/JPY has rebounded strongly after its pullback from the 164.00 confluence zone, an important resistance area aligning with the midpoint of the April 2025-July 2026 channel and the broader 2022-2026 ascending structure.
The decline found support near 155.00, where several technical signals converged:
The 38.2% Fibonacci retracement of the April 2025-July 2026 advance. Daily momentum reaching oversold conditions last seen in 2024. The breakdown area around the 2025-2026 ascending channel. The rebound from this confluence has returned attention to the 159.50-160.00 region.
Should USD/JPY stabilize above 159.50 and reclaim 160.00, bullish momentum could strengthen, exposing 161.00, 161.80, and eventually 164.00.
These former technical levels may now act as resistance as the pair once again approaches price levels not seen since the 1980s.
A sustained breakout above 164.00 would represent a significant technical development, potentially opening the path toward the upper boundary of the broader ascending channel near 170, although such a move would likely require a substantial rebuilding of upside momentum.
Conversely, another rejection from the 159.50-160.00 region followed by a close below 155.00 would weaken the rebound and expose the next support levels at 152.00 and 149.00.
The latter remains a particularly important region, aligning with the lower boundary of the 2022-2026 channel and potentially defining the longer-term bullish versus bearish structure for USD/JPY.
From a broader intermarket perspective, the bullish dollar bias remains supported while geopolitical risks persist, DXY holds above its key 99.30 support, US Treasury yields remain elevated, and expectations for additional Federal Reserve tightening remain in play.
A durable framework governing Middle East shipping routes, a DXY breakdown below 99.30, falling Treasury yields, and a further reduction in Fed tightening expectations would weaken that bullish case.
Dow Jones Outlook: Weekly Time Frame – Log Scale
Source: TradingView
Both the weekly and monthly Dow Jones charts suggest that upside momentum is becoming increasingly stretched, with the index consolidating near a major long-term technical confluence.
The key resistance area combines:
The upper boundary of the ascending channel that has guided price action since 2022. The 100% Fibonacci extension of the April 2025-January 2026-March 2026 price cycle near 54,700. Longer-term overbought momentum conditions, increasing the risk of a corrective move if buyers fail to secure a breakout. From a fundamental perspective, optimism surrounding a potential US-Iran agreement has helped improve market sentiment. However, a lasting framework has yet to be established.
Geopolitical risk premiums therefore remain embedded across financial markets, leaving the Dow's rally vulnerable while the index remains below its major resistance zone.
A decisive breakout above 54,700-55,000 would strengthen the longer-term bullish outlook and signal that buyers remain in control despite stretched momentum.
Conversely, failure to clear this resistance could encourage profit-taking and a corrective pullback.
Should a deeper decline develop, the August low near 52,400-52,200 represents the next major support region, aligning approximately with the 23.6%-27.2% Fibonacci retracement of the March-August advance.
Shorter-term levels provide additional clues about which scenario may develop first.
Dow Jones Outlook: 4-Hour Time Frame – Log Scale
Source: TradingView
From a four-hour perspective, the Dow's consolidation is approaching a critical contraction point within what resembles a descending triangle formation.
The first downside trigger sits near 53,700.
A confirmed breakdown below this level would expose:
53,400, near the 38.2% Fibonacci retracement of the July-August advance. 53,000, near the 50% retracement and the approximate target of the descending-triangle breakdown. A sustained break below 53,000 would increase the risk of a deeper correction toward the broader rising support connecting the higher lows established since April 2026, currently near 52,100.
This would also bring the 52,400-52,200 weekly support region back into focus.
On the upside, a bullish breakout from the consolidation above 54,000-54,200 would shift attention back toward the record high near 54,700.
That level remains critical.
Another rejection from 54,700 could reinforce short-term pullback risks, while a sustained breakout above the record high and ultimately 55,000 could open the path toward another longer-term advance.
Such a breakout would likely gain additional confirmation from an improving risk-on environment, easing geopolitical tensions, and a less hawkish Federal Reserve policy outlook.
USD/JPY and Dow Jones Outlook: Key Levels to Watch For now, the two markets are sending contrasting signals.
USD/JPY continues to rebuild bullish momentum toward 160, supported by broader US dollar resilience, while the Dow Jones remains near record highs but is showing increasingly stretched momentum beneath major long-term resistance.
For USD/JPY, 159.50-160.00 is the immediate upside test, followed by 161.00, 161.80, and 164.00. A move back below 155.00 would instead weaken the recovery.
For the Dow, 53,700 represents the first short-term downside trigger, while 54,700-55,000 remains the defining resistance zone for the longer-term bullish scenario.
Until these levels are decisively resolved, short-term pullback risks across risk assets remain elevated, while the US dollar retains a relatively stronger technical bias.
