Key Moments
- USD/JPY recovered toward the 156.50 area after trading near its August low, pausing a two-day slide.
- Reduced expectations for a September Federal Reserve rate hike and softer U.S. bond yields limited the Dollar’s upside.
- Market pricing for a 25 bps Bank of Japan hike in September, plus suspected intervention, continued to support the Yen.
USD/JPY Stabilizes After Testing August Low
The USD/JPY pair drew fresh buying interest on Friday, edging higher during the Asian session after approaching its August monthly low. The move lifted the pair back toward the 156.50 zone, interrupting a two-day losing streak, although gains remained restrained.
The upward drift in the pair coincided with a modest bid in the U.S. Dollar as traders adjusted positions ahead of the U.S. Nonfarm Payrolls (NFP) release. This positioning helped trigger short-covering in USD/JPY, giving the pair some near-term support.
Fed Expectations and Yields Temper Dollar Strength
Market participants scaled back expectations for a Federal Reserve rate increase in September following comments from Fed Governor Christopher Waller. He expressed optimism that inflation has begun to show signs of cooling and supported the argument for leaving policy unchanged.
In response, U.S. bond yields moved lower, a development that could restrict any meaningful extension of Dollar strength and, by extension, cap upside in USD/JPY. This backdrop suggests a need for caution among bullish traders looking for a sustained rebound in the pair.
BoJ Repricing and Intervention Talk Support the Yen
On the Japanese side, a shift toward more hawkish expectations for the Bank of Japan, combined with talk of possible intervention, continued to underpin the Yen. Market pricing now reflects a fully anticipated 25 basis point rate increase at the BoJ meeting scheduled for September 17-18, with investors also contemplating the potential for an additional move in December.
These expectations, alongside suspected intervention, are likely to act as a counterweight to Dollar demand and could limit further appreciation in USD/JPY.
Technical Picture: Downside Pressure Eases but Bears Still Dominant
From a technical perspective, USD/JPY is trading beneath a cap near the 23.6% Fibonacci retracement of its sharp weekly decline. The Moving Average Convergence Divergence (MACD) histogram is shifting into positive territory, and the Relative Strength Index (RSI) is edging toward the mid-40s. Together, these signals point more to a moderation in downside momentum than to a confirmed bullish reversal.
Analysts note that a decisive break below the primary structural support in the 155.30-155.20 band would be required to clear the way for deeper losses. Until then, the pair appears to be consolidating within a broader downtrend.
Against this backdrop, it may be prudent to wait for convincing follow-through buying before concluding that a durable base has formed around 155.30-155.20 and before positioning for further upside. Despite the intraday rebound, USD/JPY is still on course for significant weekly losses, and the fundamental environment continues to favor sellers, suggesting fresh supply could emerge at higher levels.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
US Dollar Performance Against Major Currencies
The table below summarizes the percentage change in the U.S. Dollar against major counterparts today. The Dollar showed its strongest performance versus the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.01% | -0.05% | 0.34% | -0.02% | -0.09% | -0.29% | 0.05% | |
| EUR | 0.00% | -0.05% | 0.35% | 0.02% | -0.08% | -0.27% | 0.06% | |
| GBP | 0.05% | 0.05% | 0.38% | 0.06% | -0.06% | -0.22% | 0.10% | |
| JPY | -0.34% | -0.35% | -0.38% | -0.34% | -0.44% | -0.62% | -0.30% | |
| CAD | 0.02% | -0.02% | -0.06% | 0.34% | -0.10% | -0.29% | 0.05% | |
| AUD | 0.09% | 0.08% | 0.06% | 0.44% | 0.10% | -0.17% | 0.14% | |
| NZD | 0.29% | 0.27% | 0.22% | 0.62% | 0.29% | 0.17% | 0.32% | |
| CHF | -0.05% | -0.06% | -0.10% | 0.30% | -0.05% | -0.14% | -0.32% |
The heat map is read by taking the base currency from the left-hand column and the quote currency from the top row. For instance, selecting the U.S. Dollar in the left column and moving across to the Japanese Yen cell provides the percentage change for USD (base)/JPY (quote).
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