USD/JPY Price Analysis – Sep 28, 2023

Daily Price Outlook

During the European session, the USD/JPY currency pair made a modest retreat as it tried to break the important 150.00 resistance level on Thursday. This move aligns with the US Dollar Index (DXY), which saw some profit-taking after hitting a fresh 10-month high at 106.80. Early in the Asian session, USD/JPY rose to 149.50, benefitting from higher Treasury yields, positive US economic data, and a cautious mood among investors. At the same time, the US Dollar Index (DXY) reached 106.65, its highest point since November. Notably, the 10-year Treasury yield settled at 4.60%, its loftiest level since 2007.

US Durable Goods Orders Rebound, Impacting USD and JPY

According to the US Census Bureau's report on Wednesday, Durable Goods Orders in August rebounded, increasing by 0.2% month-on-month (m/m) after a 5.6% drop in the previous report, defying expectations of a 0.5% m/m decline. Durable Goods Orders, excluding transportation, also performed better than expected, rising by 0.4% m/m against a forecasted 0.1% increase. Moreover, Core capital goods orders saw a notable rise of 0.9%, surpassing the market consensus of 0% following a previous 0.4% drop.

This data prompted a stronger US Dollar (USD) performance, weighing on the Japanese Yen (JPY). Investors remain cautious amid concerns of prolonged high-interest rates and a potential US government shutdown, although Federal Reserve (Fed) Chair Jerome Powell's upcoming speech could moderate the USD's gains if it takes on a less hawkish tone.

Potential Bank of Japan Intervention Could Strengthen Japanese Yen

The Japanese Yen might get stronger due to potential intervention by the Bank of Japan (BoJ). Finance Minister Shunichi Suzuki has emphasized that they are ready to take action if the foreign exchange market becomes too volatile. He also mentioned that they are closely watching currency movements. In Japan, Suzuki expressed his worry about the currency exchange rate and stressed the need for quick action. This cautious stance from Suzuki has made traders cautious as well, especially those considering bullish positions on the USD/JPY pair.

Looking ahead, investros are keeping an eye on important economic indicators this week, such as the US weekly Jobless Claims, second-quarter GDP revision, and Pending Home Sales data. At the end of the week, focus will shift to the Core PCE Price Index, a key measure of consumer inflation favored by the Fed, set to be released on Friday.

USD/JPY - Technical Analysis

The USD/JPY pair has sustained its upward trajectory, approaching our newly-set target of 150.00. This momentum is consistently underpinned by the EMA50, amplifying the prospects of an enduring bullish stance in both intraday and short-term contexts. It's worth noting that breaching the aforementioned level could further propel the bullish momentum, targeting successive key levels at 151.00 and subsequently 151.85.

Our forecast remains bullish for the forthcoming sessions, contingent upon the pair not descending and sustaining below the 148.40 mark.

Today's projected trading boundaries are delineated between a support at 148.70 and a resistance at 150.20.