USD/JPY approaches 150.00 on high US bond yields, hawkish Fed boosting the US Dollar

• USD/JPY rises to 149.75, gaining 0.28%, as high US Treasury bond yields and avoidance of a US government shutdown bolster the US Dollar.
• Hawkish sentiments from Federal Reserve officials, focusing on price stability and potential additional rate increases, underpin the Greenback.
• Japanese authorities’ vocal stance on potential Forex market intervention and the Bank of Japan’s dovish policies add a layer of caution to the pair’s ascent.

The US Dollar (USD) climbs against the Japanese Yen (JPY) late in the North American session, gaining 0.28%, though it remains shy of testing the 150.00 mark amid fears of an impending intervention by Japanese authorities. The USD/JPY is exchanging hands at 149.75 after hitting a daily low of 149.38.

US Dollar advances against the Japanese Yen, buoyed by rising US Treasury yields and a hawkish Federal Reserve, but fears of Japanese intervention cap gains

The US Dollar remains underpinned by high US Treasury bond yields, with the 10-year benchmark note climbing close to ten basis points at 4.672% and risk aversion. In addition, the avoidance of a US government shutdown lent a lifeline to the Greenback (USD), which extended its gains versus a basket of six currencies, also called the US Dollar Index (DXY) at 106.85, up 0.69%.

In the meantime, Federal Reserve officials remained hawkish on Monday. Fed Governor Michelle Bowman favors an additional rate increase in the thesis that inflation is too high and that elevated oil prices could trigger another raft of inflation. Recently, Fed Chair Powell said the US central bank is focused on price stability.

The data front showed that business activity, although showing signs of recovery, remains at contractionary territory, with the ISM remaining below the 50 expansion/contraction threshold at 49.8, up from 47.9 in August.

On the Japanese front, authorities remain vocal in intervening in the Forex markets amid further Japanese Yen's (JPY) deterioration. Although they expressed that fundamentals should be expressed in the USD/JPY exchange rate, the major should climb further due to the Bank of Japan (BoJ) sticking to its dovish stance of negative interest rates while keeping its ultra-loose monetary policy.

USD/JPY Price Analysis: Technical outlook

The USD/JPY is upward biased, trading above the Tenkan and Kijun-Sen lines and above the Ichimoku Cloud (Kumo). Fears of intervention refrained buyers from challenging the 150.00 figure, seen as the first resistance, followed by the latest year 151.94 mark. Conversely, if intervention occurs, key support levels are seen at the Tenkan-Sen at 148.59, the Senkou Span A at 147.87, followed by the Kijun-Sen at 147.15.

USD/JPY Price Anction - Daily chart