USD/JPY trades near 155.20 on Tuesday, rising for a second straight day and pulling away from the roughly seven-month low it set last week. A firmer US Dollar (USD) is doing the work, helped by a sharp jump in Oil that has pushed US Treasury yields higher.
West Texas Intermediate (WTI) Oil has surged more than 3% on Tuesday, and higher energy costs feed straight into inflation expectations, lifting yields and the safe-haven Dollar.
The Federal Open Market Committee (FOMC) decides on Wednesday. Markets are leaning toward a 25 basis points (bps) rise to 3.75%-4.00%, the first move after five straight holds, with US Retail Sales for August due the same morning.
Firm labor figures, including a pickup in the ADP employment gauge on its four-week average, have added to the hawkish case. A hike paired with guidance for more would extend the Dollars bounce.
The Bank of Japan (BoJ) announces its policy decision on Friday, and markets widely expect a hike, with rates expected to move to 1.25%. Strong Japanese wage and growth data have firmed those bets, and speculators have trimmed their positions against the Yen since the summers intervention.
Short-term technical analysis:
On the 4-hour chart, USD/JPY trades at 155.18. The pair holds a bullish near-term bias as it trades above the 20-period Simple Moving Average (SMA) at 154.37, while immediate resistance emerges just overhead at 155.22 and the broader trend cap sits at the 100-period SMA near 156.92. The Relative Strength Index (RSI) around 62 suggests firm positive momentum, hinting that dips could remain supported while price stays above the short-term average.
On the downside, initial support is seen at 155.06, with additional demand layered at 154.89 and 154.69, before the 20-period SMA at 154.37 reinforces the underlying floor. On the topside, a clean break above 155.22 would expose the next upside barrier at the 100-period SMA near 156.92, where the broader four-hour downtrend line implied by the longer average is likely to challenge further gains.