FX.co ★ Wiking | USD/JPY

USD/JPY bears some interest near the 158.45 level during the Asian trading session on Thursday. The Japanese Yen (JPY) is strong against the US Dollar (USD) as traders remain cautious about any intervention by the Japanese government. Fedspeak will draw attention on Thursday. Satsuki Katayama, Japan's finance minister, said the foreign exchange principles set during the coordinated Japan-US intervention remain in effect. Meanwhile, the 10-year yield on Japan's government bonds rose 8 basis points to 3.055%, marking a 30-year high in early trading after US Treasury yields rose late in the previous session. Over the past week, the Bank of Japan (BoJ) hiked its policy rate by 25 basis points to 1.25%, the highest in 27 years. The BoJ raised rates in a 7-2 decision, with BoJ Board members Toichiro Asada and Ayano Sato voting against it. The dissenters could imply that future rate hikes will be harder to achieve, possibly capping JPY upside. Bloomberg puts the likelihood of another BoJ rate hike to 1.50% in October at 30%. "Hawkish statements" from US Federal Reserve (Fed) officials may come in handy for the US dollar, or the Greenback. On Wednesday, Fed Governor Michael Barr said the US monetary authority made an important move last week to "recalibrate" short-term funding rates and curb inflation, which could mean more interest rate hikes from the US central bank. Analysts at Rabobank point out that geopolitics is becoming increasingly entwined with developments in financial markets. They state, "Trump and Japan's PM Takaichi met to reaffirm their close geopolitical and geoeconomic alliance," and emphasize that "that now includes the BoJ and the Yen carry trade too." In this regard, Rabobank emphasizes that "Japan's major banks' domestic lending share is seeing its first sustained post-1991 bubble bursting rise," and that this "is precisely what Washington and Takaichi want as (defence) industry investments rise." Fed's Barr takes a clearly hawkish tone, with an FXS Speechtracker rating of 8/10, above the historical average of 7/10. The statement of "further rate hikes likely needed to ensure timely return to 2% inflation," as well as remarks that the risks of inflation have risen, but the risks of labor market conditions have become smaller, shows a bias toward achieving price stability, rather than considering the employment situation. By acknowledging that the Fed was "out of position" and had to adjust its stance, Barr emphasizes that further rate hikes or maintaining tighter policy may be needed, which would favor the US Dollar and weigh on risky assets. The FXS Fed Sentiment Index rose 0.42 points to 148.81, indicating a clear hawkish bias above the neutral level of 100 and reinforcing that this speech will push the Fed story further toward rate hikes. The combination of a high FXS Fed Sentiment Index and an above-baseline FXS Speechtracker reading indicates a need to increase the chances of more rate hikes in the future. The daily chart shows that the USD/JPY pair retains a weak bearish bias while trading between the 20-period Bollinger middle line and the 100-day MA resistance. The pair remains above the lower volatility range, but with price constrained below the upper Bollinger band, the overall picture points to a market favoring rallies. An RSI (14) level of 54 reflects weak bullish momentum, indicating that although downward pressure remains well controlled at the moment, buyers will find it tough to retake resistance levels. In the upside scenario, resistance will come in the form of the 100-day moving average at 159.55 and, further up, the upper Bollinger band at 160.75, where testing this level will attract profit-taking and new supply. On the downside, the first support area will be the middle Bollinger band at 156.50, followed by the lower band near 152.30.