USD/JPY eyes 150.00 amid hawkish Fed and dovish BoJ, but intervention threats loom

USD/JPY extended its gains early in the North American session after hitting a daily low of 148.86. However, positive data and high US Treasury bond yields keep the pair from falling below the 149.00 figure despite Japanese authorities' threats of intervention. The USD/JPY is trading at around 149.40s, gaining 0.27%.

USD/JPY advances steadily due to divergence in monetary policy but threats of intervention are halting the rally

The financial markets narrative continues to be set by expectations of further tightening by the US Federal Reserve. Sentiment remains fragile, though the latest Durable Goods Orders beating estimates are giving a leg-up to the Greenback (USD), which would likely continue to print gains across the board. Durable Goods in August were expected to drop -0.5% but rose 0.2% and crushed last month’s -5.6% plunge. Excluding Transports, orders rose by 0.4% MoM, above estimates and July’s 0.1% increase.

Aside from this, the Fed parade continued with Minnesota’s Fed President Neil Kashkari, saying the risk for higher interest rates remains, but there’s uncertainty at a CNN Interview. He added that consumer spending remains robust and that although the Fed has progressed significantly in inflation, he’s unsure if the Fed is restrictive enough.

On the Japanese front, the Bank of Japan minutes for the July meeting showed that some members felt it was essential to explain that YCC tweaks are not a sign of ending accommodative posture while emphasizing they’re unsure if inflation will be sustainably above the 2% target. Meanwhile, the swaps market has begun to price in a possible rate hike for December and January, with odds at 70% for the former and 85% for the latter.

USD/JPY Price Analysis: Technical outlook

The daily chart portrays the pair as upward biased, but the uptrend seems overextended, due to intervention threats. However, a decisive break above 150.00 could pave the way for testing last year's high at 151.94. Nevertheless, if USD/JPY corrects lower, first support would emerge at the Tenkan-Sen at 148.39, followed by the September 7 daily high at 147.87, and the Kijun-Sen at 146.95.