USD/JPY Surges Toward 146 as Yield-Driven Risk Rally Boosts Dollar
Technical Analysis:
USD/JPY posted a significant gain of 1.4% on Thursday, climbing sharply to a near one-month high at 145.95, driven by a robust risk-on rally following the announcement of a UK–US trade deal, dovish BoE policy action, and supportive comments from U.S. President Donald Trump. The move was further amplified by an 11 basis-point jump in U.S. 2-year Treasury yields to 3.907%—their highest since mid-April. The broad-based dollar strength pushed the DXY index to its strongest level since April 10, indicating firm underlying bullish momentum for the greenback, which was notably underpinned by Trump’s criticism of the Fed’s relative reluctance to cut rates compared to other central banks.
From a technical perspective, the aggressive advance has lifted USD/JPY toward critical psychological resistance at the 146.00 mark. A sustained break and daily close above this level would significantly improve the near-term bullish outlook, potentially triggering further upside toward the key 55-day moving average at 146.71. Momentum indicators, such as the daily RSI, have turned sharply higher but are yet to reach overbought territory, suggesting that bulls still have sufficient room to push the pair higher. A definitive close above the upper Bollinger Band at 145.13—already achieved—suggests strong bullish sentiment and may prompt unwinding of recent yen-long positions, as speculators holding bearish bets reconsider their stance.
On the downside, initial support is identified at 144.95, the May 5 high. A retracement below this level would temporarily ease immediate bullish pressure, potentially prompting profit-taking and consolidation. More meaningful support lies near the conversion line at 143.93, followed closely by the pivotal 21-day moving average at 143.12. A break below the 21-DMA would be necessary to significantly neutralize the bullish trend and shift momentum back towards yen bulls. However, given current supportive factors—solid risk appetite, rising U.S. yields, and improving U.S. economic indicators—traders may continue to buy USD/JPY dips, viewing corrections as opportunities to re-establish bullish positions.