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Published: 1 October 2026,10:28
Daily Market Analysis New
*USD/JPY has climbed toward 157–158 as the yen reverses part of its earlier gains despite the BoJ’s September rate hike.
Elevated U.S. Treasury yields, cautious BoJ guidance, higher oil prices and broad dollar strength continue to pressure the yen.
Official warnings may cap moves near 160, but firmer BoJ signals or lower U.S. yields are needed to reverse the yen’s bearish bias.
The Japanese yen has outperformed most G10 peers in recent sessions, reflecting a combination of domestic policy support and heightened official vigilance against excessive depreciation. After periods of sharp weakness earlier in the year, the currency has stabilised and gained relative ground, with USD/JPY retreating from levels near the 160 psychological threshold that previously triggered intervention concerns. This relative resilience stands out against a backdrop of broad U.S. dollar strength driven by elevated Treasury yields and firmer Federal Reserve rate expectations.
Key catalysts underpinning the yen’s firmness include the Bank of Japan’s continued policy normalisation. The central bank raised its short-term policy rate to 1.25 percent in mid-September—the highest level since 1995—signalling a faster pace of adjustment than earlier anticipated and leaving open the possibility of further increases later this year. Japanese officials have also reinforced verbal and potential actual intervention readiness, with recent comments emphasising coordinated messaging with U.S. counterparts against disorderly yen declines. These factors have raised the cost of speculative short-yen positions and helped limit further depreciation even as the wide interest-rate differential with the United States continues to favour the dollar on pure yield grounds.
In the near term, the yen’s trajectory will remain sensitive to the interplay between U.S. and Japanese monetary policy paths, upcoming domestic data such as the Tankan survey and Tokyo CPI, and any fresh signals on intervention. A sustained hold by the BoJ or softer Japanese inflation readings could temper further gains, while additional tightening or renewed official action would support further appreciation. With USD/JPY still influenced by the substantial rate gap and global risk sentiment, the currency is likely to trade in a relatively contained range, with the balance of risks tilted toward moderate yen strength provided intervention threats remain credible and the BoJ maintains its normalisation course.
USDJPY, H4:
USD/JPY remains firmly within an upward trajectory after establishing strong support above the 153.00 level. The pair underwent a technical retracement in the previous session, but the latest price action suggests that the pullback has run its course, with renewed buying pressure lifting it to a fresh weekly high.
Momentum indicators reinforce the improving technical outlook. The MACD has registered a bullish crossover above the zero line, signalling a strengthening of positive momentum, while the Relative Strength Index has moved back above its neutral 50 level, indicating that buyers are regaining control.
As long as USD/JPY remains supported above 153.00, the broader bullish structure is likely to remain intact. Sustained upward momentum could drive the pair toward the key psychological resistance at 160.00 in the near term. However, failure to maintain the latest breakout would raise the risk of another corrective pullback before the uptrend can resume.
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