USD/JPY awaits Japan intervention around 30-year high above 149.00, yields stay sluggish

• USD/JPY pauses 10-day uptrend at the highest level since 1990.
• Market sentiment remains positive but signals of Japan meddling to defend yen probe the pair buyers.
• Inactive yields also test buyers despite hawkish Fedspeak, mixed US data.
• Risk catalysts are the key as sellers seek entries.

USD/JPY treads water around 149.20-30 as Tokyo opens on Wednesday. In doing so, the yen pair prints mild losses while snapping the 10-day uptrend as policymakers from Japan roll-up their sleeves to defend the currency that stays at the lowest levels in 30 years versus the USD.

Recently, Japanese Finance Minister Shunichi Suzuki said that he was checking currency rates "meticulously" and with more frequency, Jiji News reported, as the yen continues to weaken against the dollar and markets watch for signs of intervention, per Reuters. The news also quotes Japan’s Suzuki as saying that the government would "properly respond" in the foreign exchange market based on existing policy.

It should be noted, however, that the US dollar fails to capitalize on the firmer industrial production amid the risk-on mood and sluggish Treasury yields, which in turn challenges the USD/JPY buyers of late.

That said, the US Dollar Index (DXY) remains sidelined near 112.00 at the latest while the US 10-year Treasury yields seesaw near 4.0% mark. Additionally, the S&P 500 Futures rise 0.80% intraday while tracking Wall Street’s second daily gain.

To sum up, the sluggish yields and Japan policymakers’ jawboning challenge the USD/JPY bulls. However, the market’s risk-on mood and the US dollar’s failure to rebound keeps the buyers hopeful.

Above all, the monetary policy divergence between the Fed and the Bank of Japan (BOJ) propels the yen pair. Recently, Minneapolis Federal Reserve Bank President Neel Kashkari said, “Until I see some compelling evidence that core inflation has at least peaked, not ready to declare a pause in rate hikes.” On the other hand, BOJ Governor Haruhiko Kuroda defends the easy money policy in his latest speeches.

Moving on, second-tier housing data from the US will decorate the calendar but major attention will be given to Japan intervention and risk catalysts for clear directions.

Technical analysis

An upward-sloping resistance line from July, around 149.40 by the press time, restricts the immediate USD/JPY pair’s further upside.