USD/JPY Price Forecast: Soars past 146.00 boosted by US yields

USD/JPY maintains a downward bias, needing to break key resistances for a bullish shift.
Short-term buyer momentum faces obstacles at 146.93 (Senkou Span A) and 148.46 (Kijun-Sen), with an eye on the 149.39 peak.
Mixed RSI signals suggest short-term buyer dominance but an unclear broader trend.
A drop below 145.39 (Tenkan-Sen) could trigger further losses, with supports at 143.44 (August 26 low) and 141.69 (August 5 low).

The USD/JPY rallied past the 146.00 figure for the first time of the week, as US Treasury bond yields rose sharply following the release of the Fed’s favorite inflation report. The US 10-year Treasury note yield rose four and a half basis points to 3.909%, underpinning the major towards 146.17 after bouncing off daily lows of 145.56.

USD/JPY Price Forecast: Technical outlook

The USD/JPY is downward biased despite surpassing above the Tenkan-Sen lying at 145.39. The Relative Strength Index (RSI) shows that momentum is mixed, with the indicator being at bearish territory but aiming up.

Short-term buyers are in charge, but they must push the USD/JPY spot price above the Senkou Span A at 146.93 and clear the Kijun-Sen at 148.46 before they can clear the latest cycle high at 149.39, the August 15 daily high.

Conversely, a USD/JPY move below the Tenkan-Sen will expose the latest cycle low, seen at 143.44, the August 26 low. The pair could extend its losses past that level, and sellers could target August 5 through 141.69.

USD/JPY Price Action – Daily Chart

Japanese Yen FAQs

What key factors drive the Japanese Yen?

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.

How do the decisions of the Bank of Japan impact the Japanese Yen?

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 current BoJ ultra-loose monetary policy, based on massive stimulus to the economy, has caused the Yen to depreciate against its main currency peers. This process has exacerbated more recently due to an increasing policy divergence between the Bank of Japan and other main central banks, which have opted to increase interest rates sharply to fight decades-high levels of inflation.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

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 supports a widening of the differential between the 10-year US and Japanese bonds, which favors the US Dollar against the Japanese Yen.

How does broader risk sentiment impact the Japanese Yen?

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.

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