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Published: 23 October 2026,03:27
Daily Market Analysis New
*USD/JPY fell to 156.86, a five-week low, as technology sell-offs and weaker U.S. Treasury yields boosted demand for the yen.
*Hawkish BoJ commentary and September inflation at 2.1% reinforced expectations of a potential December rate hike, while intervention concerns near 160 added support.
*The October 28 Fed meeting and October 30 BoJ decision are key catalysts. Continued risk aversion and lower U.S. yields could push USD/JPY lower, while renewed dollar strength may lift it toward 157–158.
The Japanese yen strengthened notably in the previous session, with USD/JPY declining to around 156.86, its strongest level since late September and a five-week high. The currency outperformed most G10 peers as global equity markets, particularly technology and artificial intelligence-related stocks, experienced a broad selloff that triggered demand for traditional safe-haven assets. This risk-averse shift provided immediate support for the yen.
Several factors reinforced the move. Hawkish commentary from Bank of Japan officials, including Governor Kazuo Ueda’s assessment that underlying inflation is approaching the 2 percent target, strengthened market expectations of a further rate increase in December following the September hike to 1.25 percent. Softening U.S. Treasury yields reduced the interest-rate differential that has long favored the dollar, while Japanese inflation data showing both headline and core measures at 2.1 percent year-on-year in September added to the case for continued policy normalization. Speculative positioning also turned more constructive toward the yen amid lingering concerns that any renewed push toward the 160 level could prompt official intervention.
In the near term, the yen’s trajectory will depend on the outcome of the Federal Reserve’s meeting on October 28 and the Bank of Japan’s decision concluding on October 30. Markets widely anticipate the BoJ will hold rates steady this month while maintaining a hawkish tone that keeps a December hike firmly in play. Persistent Middle East tensions and elevated energy prices continue to complicate Japan’s inflation outlook and could limit the pace of further appreciation. Should global risk sentiment remain fragile or U.S. yields continue to ease, the yen may test lower levels against the dollar. Conversely, any renewed dollar strength driven by firmer Fed expectations or a de-escalation in geopolitical risks could cap gains and return USD/JPY toward the mid-157 to 158 range.
USDJPY, H4:
USD/JPY has lost its bullish momentum after previously maintaining an upward trajectory. Following a period of consolidation near its recent peak, the pair has broken below its established uptrend, signalling a potential shift in market sentiment. The subsequent decline has pushed the pair to its lowest level in October, reinforcing the emerging bearish bias.
The breakdown below the ascending trendline suggests that selling pressure is gaining traction, with the pair increasingly vulnerable to further downside.
As long as USD/JPY remains below its broken uptrend trajectory, the near-term outlook is likely to remain tilted to the downside. A sustained break below the immediate support level at 156.30 could reinforce the bearish momentum and pave the way for further losses. However, a successful defence of this support zone could trigger a technical rebound or a period of consolidation before the next directional move.
Resistance Levels:157.55, 158.80
Support Levels:154.70, 153.40
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