HG MARKETS: 

USD/JPY remains under pressure as the yen continues to strengthen on growing expectations of further monetary policy tightening by the Bank of Japan. Markets are increasingly pricing in a 25-basis-point rate hike at the BOJ’s September 17–18 meeting, with recent comments from BOJ officials reinforcing expectations for policy normalization. A potential narrowing of the interest-rate gap between Japan and the U.S. is reducing the appeal of yen-funded carry trades, adding to the selling pressure on USD/JPY.

The risk of further Japanese currency intervention is also weighing on the pair. Japan reportedly carried out significant yen-buying and dollar-selling operations in August, spending around ¥15.4 trillion to support the currency. The intervention pushed USD/JPY lower from its previous highs and has made traders more cautious about taking fresh long positions. With the yen already gaining strength, renewed intervention signals could further accelerate the pair’s downside move.

At the same time, markets are closely watching upcoming U.S. inflation data, particularly the CPI and PPI reports, for clues about the Federal Reserve’s next policy move. Stronger-than-expected U.S. employment data has increased expectations for a September Fed rate hike, but the dollar has struggled to capitalize on those expectations as other major central banks are also expected to maintain or tighten monetary policy. A softer U.S. inflation reading could strengthen the bearish outlook for USD/JPY, while hotter-than-expected data could provide some short-term support to the dollar.

Technically, USD/JPY is facing strong selling pressure after falling to around 154.04, its lowest level in the current move. The pair remains vulnerable while trading below the 155.00 psychological level, with a sustained break below 154.04potentially opening the way toward 153.30 and lower levels. On the upside, 155.00–155.30 remains the first key resistance zone, followed by 156.00. Overall, the near-term bias remains bearish unless USD/JPY manages to reclaim the 155.00–156.00 area.

Key Levels:

• Resistance 1: 155.00
• Resistance 2: 156.00–156.30
• Support 1: 154.04
• Support 2: 153.50

Overall, USD/JPY bias remains bearish below 155.00, with a clear break of 154.04 likely to reinforce expectations for another downside leg. Current market commentary also identifies the pair as vulnerable as BOJ rate-hike expectations and intervention concerns support the yen.