Japanese Yen slips as Oil lifts yields ahead of the Fed

USD/JPY is up for a second straight day, lifted by a firmer US Dollar as a jump in Oil pushes US yields higher.
Wednesday's Fed decision, with markets leaning toward a rate hike, and US Retail Sales are the immediate catalysts.
Gains look capped by Friday's Bank of Japan meeting, where a hike is widely expected to support the Yen.

Agustin Wazne FXStreet

USD/JPY trades near 155.20 on Tuesday, rising for a second straight day and pulling away from the roughly seven-month low it set last week. A firmer US Dollar (USD) is doing the work, helped by a sharp jump in Oil that has pushed US Treasury yields higher.

West Texas Intermediate (WTI) Oil has surged more than 3% on Tuesday, and higher energy costs feed straight into inflation expectations, lifting yields and the safe-haven Dollar.

The Federal Open Market Committee (FOMC) decides on Wednesday. Markets are leaning toward a 25 basis points (bps) rise to 3.75%-4.00%, the first move after five straight holds, with US Retail Sales for August due the same morning.

Firm labor figures, including a pickup in the ADP employment gauge on its four-week average, have added to the hawkish case. A hike paired with guidance for more would extend the Dollar's bounce.

The Bank of Japan (BoJ) announces its policy decision on Friday, and markets widely expect a hike, with rates expected to move to 1.25%. Strong Japanese wage and growth data have firmed those bets, and speculators have trimmed their positions against the Yen since the summer's intervention.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 155.18. The pair holds a bullish near-term bias as it trades above the 20-period Simple Moving Average (SMA) at 154.37, while immediate resistance emerges just overhead at 155.22 and the broader trend cap sits at the 100-period SMA near 156.92. The Relative Strength Index (RSI) around 62 suggests firm positive momentum, hinting that dips could remain supported while price stays above the short-term average.

On the downside, initial support is seen at 155.06, with additional demand layered at 154.89 and 154.69, before the 20-period SMA at 154.37 reinforces the underlying floor. On the topside, a clean break above 155.22 would expose the next upside barrier at the 100-period SMA near 156.92, where the broader four-hour downtrend line implied by the longer average is likely to challenge further gains.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Author

Agustin Wazne

FXStreet

Agustin Wazne joined FXStreet as a Junior News Editor, focusing on Commodities and covering Majors.

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