USD/JPY has softened to approximately 158.90 during the Asian session on Wednesday. The Treasury could utilise its General Account to assist in financing government bond acquisitions. The majority of economists anticipated that the BoJ would increase its rate in September, as indicated by a poll. The Japanese Yen has appreciated following the US bond buyback, as traders prepare for the upcoming US PCE inflation report. The USD/JPY pair experiences a decline, approaching 158.90 during the Asian trading hours on Wednesday. The US Treasury’s bond buyback programs exert pressure on the US Dollar relative to the Japanese Yen. The US July Personal Consumption Expenditures Price Index data will be in focus later on Wednesday, as it precedes the Jackson Hole symposium on Friday. US Treasury Secretary Scott Bessent stated last week that the US Department of the Treasury will increase its bond buyback operations to a minimum of $4 billion per operation, up from the existing maximum of $2 billion, in a bid to stabilise the rising long-term borrowing costs.
US Treasury bond buybacks have sparked apprehension as the national debt exceeds $40 trillion, contributing to a decline in the value of the Greenback. On Tuesday, two senior Treasury officials indicated that the Treasury might utilise its nearly $1 trillion General Account to support its recently unveiled intentions to augment purchases of government bonds. The Bank of Japan announced on Wednesday that Governor Kazuo Ueda will be absent from the US Federal Reserve’s annual Jackson Hole gathering this week owing to a scheduling conflict. Naoki Tamura, a member of the Bank of Japan’s board, will represent him at the event. In a survey conducted from August 17 to 24, indicated that 57% of economists anticipated an increase in the Japanese central bank’s interest rate in September, marking a significant shift from the findings of a July poll.
A minority, 10 of 58, anticipated a subsequent increase to 1.50% in either October or December. Strategists emphasise that, although short-term pricing has aligned with expectations for Bank of Japan tightening ahead of the September 18 meeting, “greater risk will center around the central bank’s tone as market participants look beyond the September 18 meeting,” with investors becoming more attuned to how policymakers articulate the future policy trajectory. In the daily chart, USD/JPY exhibits a bearish near-term bias as the spot price remains below the 100-day Simple Moving Average. Price is currently positioned above the 20-day Bollinger middle band; however, it remains constrained by the upper band.
This indicates a corrective rebound occurring within the context of a more extensive topside exhaustion phase. The Relative Strength Index (14) at 43.64 remains below the neutral 50 line, indicating that recovery efforts are lacking robust momentum, while sellers continue to dominate beneath the critical moving average threshold. On the topside, initial resistance is positioned at the 100-day SMA at 160.00, with a breach revealing the Bollinger upper band approximately at 160.30 as the subsequent obstacle. On the downside, immediate support emerges at the 20-day Bollinger middle band at 158.75, ahead of a lower structural cushion at the Bollinger lower band near 157.20.
