USD/JPY oscillates around 149.90 after testing 150.00, though fears of BoJ’s intervention loom

• USD/JPY edges up during the New York session, following a test of the 150.00 figure, as BoJ intervention lurks.
• Japanese authorities, namely the Bank of Japan and the Finance Ministry, continued to express worries about the yen’s weakness.
• Mixed US economic data would not deter the Federal Reserve from hiking in the last two meetings of 2022.

The USD/JPY marched firmly after hitting the 150.00 mark for the first time in 32 years but retraced below the figure, at around 149.90s, at the time of writing, as market players weighed on a possible “stealth” intervention by Japanese authorities, even though the Bank of Japan’s loose monetary policy, and the Fed’s aggression, justifies higher exchange rates in the major, meaning a weaker Japanese yen, and a strong American Dolar.

Traders are testing Japanese authorities

During the Asian session, Japanese authorities ramped up their verbal intervention in the markets as the USD/JPY surpassed the 150.00 figure. Additionally, the 10-year JGB’s yield shot through the upper band imposed by the BoJ, above 0.25%, propelling the central bank to buy $667 million in government debt to put a lid on the 10-year JGB yield rise.

US economic indicators flashed mixed signals on Fed’s aggressive policy

Aside from this, the US Department of Labor revealed that claims for unemployment for the week ending on October 15 rose by 214K less than the 228K estimated by the street’s economists, flashing the labor market tightness. At the same time, the Philadelphia Fed reported its Business Conditions Index for October, which came at -8.7, below the -5.0 forecasts, but better than September’s -9.9 number.

In the meantime, the US housing market prolonged its deterioration as September’s Existing Home Sales shrank by 1.5%, to 4.71 million houses, vs. estimates of a 2.14% contraction.

Given the backdrop, Fed’s aggressive monetary policy continues to deliver mixed shocks. Even though is already known that housing and construction are the first segments of the economy to feel the shocks, the labor market lags sharply. Meanwhile, a slew of Fed speakers led by St. Louis Fed President James Bullard, Minnesota’s Neil Kashkari, and Chicago Fed Charles Evans, reiterated the Fed needs to continue front-loading through the remainder of 2022 and could shift towards gradual increases in 2023.

Therefore, due to central bank divergence between the BoJ and the Federal Reserve, further upside pressure in the USD/JPY is expected. However, FX verbal interventions would likely keep the pair advancing steadily without spectacular waves above 150.00, as the next key resistance lies around 151.65.

USD/JPY Price Forecast

The USD/JPY daily chart confirms the pair as upward biased, though Japanese verbal intervention might refrain traders from opening fresh bets against the Japanese yen (JPY) fall. Nevertheless, if the USD/JPY continues to advance steadily, the next key resistance areas lie at July’s 1990 swing high at 151.65, followed by the June 1990 pivot high at 155.80.