The USD/JPY currency pair has recovered some ground, rallying toward a daily four-day high near 157.80, as traders digest comments from US Treasury Secretary Scott Bessent regarding undesirable volatility in the foreign exchange space. These remarks prompted a Yen buy, resulting in the pair rising by over 0.30% at the time of writing [1].
From a technical perspective, the USD/JPY outlook remains neutral to downwardly biased, following the Bank of Japan's (BoJ) intervention in the FX market on April 30. This intervention has prevented buyers from testing the 158.00 level [1]. The Relative Strength Index (RSI) is currently bearish but trending upward, indicating that buyers are beginning to move in [1].
For a bullish continuation, USD/JPY must clear the 158.00 mark, which could trigger a move toward the 50-day Simple Moving Average (SMA) at 158.71 and potentially the 159.00 figure. Around these levels, Japanese authorities may begin verbal jawboning or intervene in the markets again [1]. On the downside, the first support level is at 157.00, with further support at the May 11 daily low of 156.51 and the May 7 daily low of 156.02 [1].
The article also notes that the value of the Japanese Yen is influenced by the BoJ's policy decisions, the differential between Japanese and US bond yields, and broader risk sentiment among traders. The BoJ's gradual unwinding of its ultra-loose monetary policy in 2024, alongside interest-rate cuts in other major central banks, is narrowing the yield differential, which may provide some support to the Yen [1].
CONCLUSION
USD/JPY has rebounded, driven by market reactions to US Treasury comments and recent BoJ intervention. Technical indicators suggest buyers are returning, but the pair faces resistance at 158.00, with potential for further volatility if Japanese authorities intervene again. The narrowing yield differential and evolving BoJ policy remain key factors for future Yen movements.