Dollar rise vs yen a little too fast and furious, but still intact

Aug 17 – USD/JPY’s 8-day run of higher lows and highs, the most since just before 2022’s massive, Japanese intervention-triggered reversal from 32-year highs, pulled back to rising supports with Friday’s Japanese CPI report the next event risk.

USD/JPY’s August advance is running into overbought resistance from 21-day and 10-week Bolli bands and daily RSIs, but the string of higher lows and highs is intact unless Wednesday’s 145.31 low on EBS is breached.

So far, prices have found buyers by the rising hourly cloud top and 100-hour moving average, as well as Thursday’s largest options expiries at 145.50.

US claims data were near forecast, though Philly Fed was a bullish surprise, albeit a small piece of the US puzzle and followed Monday’s big NY Fed miss.

For USD/JPY the next event risk is Friday’s Japan CPI report. Core is forecast at 3.1% from 3.3% in June. With 10-year JGB yields up at their post-BoJ meeting highs, though well below the new 1% yield curve cap, traders will be watching to see if the BoJ again buys JGBs to keep yields in check.

But Treasury yields remain the primary driver as 2- and 10-year yields near their post-pandemic peaks at 5.12% and 4.338%, respectively. If those hold, USD/JPY could correct at least to 145. If they’re cleared, USD/JPY could test resistance near 148.

(Randolph Donney is a Reuters market analyst. The views expressed are his own.)