USD/JPY falls to seven-month low: What’s going on?

USD/JPY fell to 153.50 on Wednesday, leaving the Japanese yen close to its strongest level in almost seven months. The currency is receiving additional support from comments by US Treasury Secretary Scott Bessent, which have made market participants increasingly cautious about betting against the yen.

Bessent said he clearly understood what to expect from the Bank of Japan, particularly regarding when Japanese authorities are prepared to respond to excessive exchange-rate movements. His remarks have reinforced traders’ concerns about further intervention in the currency market.

Expectations surrounding Japanese monetary policy are also supporting the yen. The Bank of Japan could raise interest rates as early as next week. At the same time, Sanae Takaichi’s administration has adopted a firmer stance on the currency, acknowledging the need to curb excessive yen weakness.

The yen is also benefiting from the unwinding of carry trades and growing expectations of capital repatriation to Japan. Meanwhile, sentiment among Japanese manufacturers improved for a second consecutive month in September, supported by resilient demand from the semiconductor and data-centre sectors.

USD/JPY technical analysis

On the H4 USD/JPY chart, the market formed a consolidation range around 154.81. The range subsequently expanded downwards to 152.88 and upwards to 154.39.

An upside breakout from the current range could open the way for a recovery towards 154.88. Conversely, a downside breakout would increase the likelihood of a further correction towards 152.12.

The MACD indicator supports the bearish scenario. Its signal line remains below zero and is pointing firmly downwards, indicating continued downside momentum.

On the H1 USD/JPY chart, the market completed an upward move to 154.41 and is currently forming a downward move towards 152.12.

A break below 152.12 could extend the decline towards 149.30.

The Stochastic oscillator also supports the bearish outlook. Its signal line is below 50 and is falling sharply towards 20, suggesting that downward momentum may persist in the short term and push USD/JPY to new local lows.

Conclusion

The yen remains supported by a combination of monetary policy expectations, intervention risks, carry-trade unwinding and improving domestic economic sentiment. As long as USD/JPY remains under pressure below the 154.39–154.88 area, the technical picture continues to favour a move towards 152.12.

A confirmed break below this level could strengthen bearish momentum and expose the 149.30 area as the next downside target. A recovery above 154.39, however, would weaken the immediate bearish scenario and could trigger a rebound towards 154.88.