USD/JPY hits new high for the year as US yields rise

• USD/JPY hits a new year-to-date high of 149.18, underpinned by rising US yields.
• The Federal Reserve’s upward revision of the Federal Funds Rate (FFR) for next year has propelled the USD to new yearly highs.
• Japanese authorities are concerned about “excessive volatility,” led by Prime Minister Fumio Kishida and Finance Minister Shunichi Suzuki.

The pair USD/JPY reaches a new annual high at 149.18, although traders remain cautious given the expressions of the Japanese authorities about “undesirable” and “excessive” movements in the currency markets. However, the dollar remains in the lead, supported by high US Treasury bond yields. The pair continues to trade above 149.00, posting a minuscule 0.12% gains.

The Yen weakens, but continues to be boosted by verbal intervention from the Japanese authorities

The fall of the Japanese Yen remains cushioned by the expressions of the Japanese authorities, since its Minister of Finance, Shunichi Suzuki, commented: “Excessive volatility is not desirable.” The last Japanese official who spoke about the rise of the yen was the Prime Minister , Fumio Kishida, who also ordered his cabinet to prepare a new economic package to alleviate the pains of inflation, including food and energy.

Aside from this, the dollar extended its gains as US Treasury yields remain underpinned by expectations that interest rates will be “higher for longer”, as the US president said. US Federal Reserve, Jerome Powell. As the Fed revised its 2024 forecast to keep rates above the 5% threshold, investors reacted accordingly, pushing up US bond yields; Therefore, the Dollar rose.

Following the Fed’s decision, some policymakers said the U.S. central bank should be patient, but most expect an additional rate hike toward the end of 2023.

US consumer confidence deteriorated in September, Conference Board (CB) data showed. CB Consumer Confidence slowed to 103 from 108.7 in August and missed expectations of 105.5, as Americans remain pessimistic about the economy.

Additionally, real estate data was mixed: Building permits rose while home sales plummeted, driven by rising mortgage rates.

USD/JPY Price Analysis: Technical Outlook

From a technical standpoint, USD/JPY is set to test the waters of 150.00 in the near term, but threats of intervention could suggest a nimble approach to that level. A breakout of that zone, the next resistance would be the October 21 high at 151.94, followed by the 152.00 signal. Conversely, if the major pair falls below the Tenkan-Sen at 148.10, it could pave the way towards the latest cycle low seen at 144.44, the September 1 swing low. However, on their way south, sellers would face key support levels such as the Kijun-Sen at 146.82, followed by the psychological level of 145.00.