USD/JPY softens to approximately 157.65 in the early Asian session on Thursday. Bessent stated that the US supported Japanese Yen intervention to assist in stabilising Asian currencies. The US July jobs data will attract significant attention later on Friday. The USD/JPY pair is currently positioned in negative territory, hovering around 157.65 in the early hours of trading on Thursday in the Asian market. The Japanese Yen strengthens against the US Dollar following a coordinated currency intervention by the United States and Japan. The US Initial Jobless Claims report is set to be released later on Thursday. Earlier this week, Japan’s Finance Minister Satsuki Katayama stated that Tokyo and Washington engaged in a coordinated Yen-buying intervention and expressed a readiness to take additional measures if necessary. US Treasury Secretary Scott Bessent indicated that the US would not hesitate to re-enter the market, while US President Donald Trump expressed his endorsement by characterising the intervention as “a signal of friendship.”
Bessent stated on Tuesday that the US aligned with Japan’s initiative to bolster the JPY, as the currency’s frailty posed a risk of destabilising markets throughout Asia. Concerns regarding potential further measures from regulatory bodies may provide support for the JPY, posing challenges for the currency pair in the short term. “Intervention is a strategy that buys time and could end up being a waste without being followed up with BOJ rate hikes,” said Kazuo Momma, a former BOJ executive who is currently executive economist at private think tank Mizuho Research Institute. “The fact the United States joined in the intervention is very grave. If the Japanese government were to block the BOJ from raising rates, that would be an act of betrayal to the United States,” Momma added.
Analysts note that stronger wage data have materially shifted expectations for the Bank of Japan’s next move. They highlight that “implied odds of a 25bps BoJ rate hike to 1.25% at the next September 18 meeting rose to 60% from a low of nearly 40% ahead of the wage data.” While they acknowledge that “underlying inflation in Japan remains subdued,” BBH argues that “risks are skewed towards further hawkish BoJ repricing in favor of JPY,” pointing out that “the policy rate is near the lower end of the bank’s neutral range (1.10%-2.50%) while the economy is operating above potential.” In the daily chart, USD/JPY demonstrates a continued bearish near-term bias as the spot remains positioned below the 100-day simple moving average and the 20-day SMA of the Bollinger bands.
The pair is moving away from the recent volatility envelope, with the price now nearer to the lower band than the upper one. Meanwhile, the Relative Strength Index (14) at 27.96 indicates oversold conditions, suggesting that downside pressure is significant but has not yet reversed. On the topside, initial resistance is observed at the 100-day SMA near 160.00, followed by the Bollinger 20-day SMA around 161.40. A more significant cap is identified at the Bollinger upper band near 166.26. On the downside, immediate support is defined by the Bollinger lower band at 156.55, where a pause or corrective bounce could occur if sellers push the pair back into the volatility floor. The subsequent level of contention to monitor is the low of 155.04 recorded on May 6.