USD/JPY Rises Steadily as Yen Weakens Amid Bond Market Pressures

By RoboForex Analytical Department 

The USD/JPY pair extended its gains on Wednesday, climbing to 144.46 as the Japanese yen depreciated for the third consecutive session.

Key factors driving USD/JPY movement

Markets are closely scrutinising remarks from major central bankers and developments in the bond sector.

Bank of Japan (BoJ) Governor Kazuo Ueda noted that ongoing trade discussions with the US are contributing to heightened uncertainty in Japan’s economic outlook. He reiterated the central bank’s readiness to adjust monetary policy if necessary to achieve its inflation targets.

Meanwhile, Finance Minister Katsunobu Kato stated that authorities are closely monitoring the bond market. This comes after both the yen and Japanese government bond (JGB) yields fell sharply following reports that the Ministry of Finance might reduce the issuance of ultra-long-dated bonds.

The potential reduction in bond supply appears to be an effort to curb rising yields, particularly after last week’s disappointing 20-year bond auction, which saw the weakest demand in a decade. Investors are now turning their attention to an upcoming 40-year bond sale.

Additionally, subdued market volatility and a stable external backdrop have diminished demand for the yen as a safe-haven asset, further contributing to its decline.

Technical analysis: USD/JPY

H4 Chart:

On the H4 chart, USD/JPY completed a downward wave to 142.15 before initiating an upward move towards 145.50, which remains the primary target. Today, we anticipate the completion of this upward wave, followed by a potential pullback to 143.81. A broader consolidation phase around this level is also plausible. This scenario is supported by the MACD indicator, whose signal line remains above zero and continues to trend upwards.

H1 Chart:

On the H1 chart, the pair formed a consolidation range around 143.85 after an initial upward wave. A breakout above this range could see a push towards 145.50, with a possible retracement to 143.85 before resuming the uptrend. A sustained break above 145.50 may extend gains towards 147.20. The Stochastic oscillator aligns with this outlook, with its signal line above 50 and rising towards 80, indicating bullish momentum.

Conclusion

The USD/JPY uptrend remains intact, supported by both fundamental and technical factors. Traders will be watching bond market developments and central bank signals for further directional cues.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.