USD/JPY remains firm amid US asset rally and softer JGB yields; critical resistance near 145 eyed
USD/JPY extended its recent recovery, holding firmly above the pivotal 200-hour moving average at 144.08 as a robust 2% surge in the S&P 500 underpinned broader market sentiment, lifting risk appetite and supporting the dollar. Although U.S. Treasury yields retreated modestly following reports that Japan’s Ministry of Finance may scale back longer-term JGB issuance, improved U.S. consumer sentiment data and lower oil prices further buoyed investor confidence, sustaining the bid tone in USD/JPY. Additionally, easing concerns over Japanese investors trimming U.S. holdings—following U.S. legislative clarity around Nippon Steel’s $14.9 billion acquisition of U.S. Steel—helped bolster USD optimism.
Technically, USD/JPY is navigating neutral territory in the short term, facing key nearby hurdles including the 21-day moving average currently positioned at 144.64, closely followed by the Ichimoku cloud bottom resistance at 144.67. A convincing daily close above these technical barriers is essential for bulls to extend the recent rebound, potentially targeting stronger overhead resistance at the 55-day moving average (145.79). Momentum indicators on the daily timeframe, such as the RSI and MACD, suggest upside momentum is improving, lending credibility to further short-covering rallies if these immediate hurdles are cleared decisively.
Initial support for USD/JPY lies at 143.09, the intraday high from May 26, followed by more significant support levels at the May 6 low (142.36) and the structurally important April 22 high (141.68). Given current fundamentals, particularly favorable developments related to JGB yield dynamics and reduced risk around U.S.-Japan trade and investment flows, downside risks appear limited for now. Nonetheless, traders should closely monitor Wednesday’s 40-year JGB auction and upcoming Fed commentary, as these events could introduce fresh volatility and potentially alter near-term positioning in yen pairs.