USDJPY Technical Analysis – JGB market intervention weakens the Yen

Fundamental Overview

The USD has been supported across the board in the first half of the month as the positive news on the trade front triggered a more hawkish repricing in interest rates expectations. Once the market got back in line with the Fed’s baseline of two rate cuts in 2025, the greenback lost that support and began to weaken again.

For further gains, the US Dollar will need either strong economic data to make the market to price out the rest of the rate cuts expected by year-end or weak data from its peers to make the divergence with the Fed stronger.

On the JPY side, the currency has been supported recently by the surge in long term Japanese yields as repatriation flows likely boosted the famous safe haven. Market participants were calling for some kind of intervention before things could get uglier.

Sure enough, yesterday we got the news that Japan was considering trimming the issuance of super-long bonds. That was enough to calm the markets, and we saw yields and the Japanese Yen falling pretty quickly.

USDJPY Technical Analysis – Daily Timeframe

On the daily chart, we can see that USDJPY bounced around the most recent swing low at 142.35 and extended the move to the upside following the Japanese bond market news. There’s not much we can glean from this timeframe, so we need to zoom in to see some more details.

USDJPY Technical Analysis – 4 hour Timeframe

On the 4 hour chart, we can see that the price broke above the downward trendline that was defining the bearish momentum and the resistance zone around the 143.00 handle. If the price comes back to retest the resistance now turned support, we can expect the buyers to step in with a defined risk below the support to position for a rally into the 148.32 level. The sellers, on the other hand, will want to see the price breaking lower to start targeting the 140.00 handle again.

USDJPY Technical Analysis – 1 hour Timeframe

On the 1 hour chart, we can see that we have a minor support zone around the 143.85 level. From a risk management perspective, the buyers will have a better risk to reward setup around the minor support to position for further upside, while the sellers will look for a break lower to pile in for a deeper pullback into the 143.00 handle. The red lines define the average daily range for today.

Upcoming Catalysts

Today, we have the FOMC Meeting Minutes. Tomorrow, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the Tokyo CPI, the US PCE price index and the final UMich Consumer Sentiment report.

Watch the video below