USD/JPY bounced modestly on Wednesday after coming under pressure earlier in the day amid another questionable intervention by Japanese authorities. At the time of writing, the pair is trading around 156.42 after recovering from intraday lows near 155.00.
Despite a modest recovery, USD/JPY remained down about 0.90% on the day as the US dollar (USD) softened on hopes of a potential US-Iran deal following an Axios report that suggested Washington and Tehran are moving closer to an agreement aimed at ending the war and setting a framework for broader nuclear talks.
However, uncertainty over whether the two sides can reach a final agreement is helping limit deep losses in the greenback. The US Dollar Index (DXY), which tracks the value of the US dollar against a basket of six major currencies, traded around 98.04 after touching an intraday low of 97.62, although it is down about 0.45% on the day.
Meanwhile, USD/JPY remains vulnerable to further intervention risks. Although Tokyo has not officially confirmed any intervention, repeated warnings from Japanese authorities keep traders on alert.
Still, the Japanese Yen (JPY) has struggled to gain meaningful traction as the ongoing oil supply disruption in the Middle East continues to weigh on sentiment, given Japan’s heavy reliance on imported energy, with a significant portion of shipments passing through the Strait of Hormuz.
Looking ahead, traders will continue to keep an eye on developments surrounding the US-Iran talks, particularly any progress towards reopening the Strait of Hormuz.
Attention also turns to upcoming Japanese economic data, including Labor cash earnings and minutes from the Bank of Japan’s monetary policy meeting on Thursday. In the US, traders await the weekly initial jobless claims on Thursday, followed by the Nonfarm Payrolls (NFP) report on Friday.
technical analysis:
In the daily chart, USD/JPY remains bearish in the near term as the spot 100-day simple moving average (SMA) at 157.36 and 50-day SMA at 158.69 are now capped on the upside. The pair is still supported by the 200-day SMA at 154.24, but the Relative Strength Index (RSI) near 38 and a negative Moving Average Convergence Divergence (MACD) suggest that downside momentum is building, while the strength of the trend, reflected by the Average Directional Index (ADX) around 23, remains only moderate.
On the downside, initial demand is seen just below the market at horizontal support around 155.50, which is ahead of the 200-day SMA at 154.24, indicating a more significant structural floor. At the top, a recovery would first encounter resistance at the 100-day SMA at 157.36, with the 50-day SMA at 158.69 requiring a sustained break to challenge and ease the existing bearish pressure.
(The technical analysis for this story was written with the help of AI tools.)
economic indicators
Labor Cash Income (YoY)
This indicator, released by the Ministry of Health, Labor and Welfare, shows the average income before taxes per regular employee. This includes overtime pay and bonuses but does not take into account earnings from holding financial assets nor capital gains. Higher incomes put upward pressure on consumption, and are inflationary for the Japanese economy. Generally, a reading higher than expected is bullish for the Japanese Yen (JPY), while a reading lower than market consensus results in bearish.
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