USD/JPY advances modestly bolstered by Fed officials as a Japanese intervention looms

• USD/JPY advances, preparing to finish the week with gains of almost 2.80%.
• Fed policymakers are laser-focused on taming inflation towards its 2% target.
• Japanese authorities remain nervous due to high volatility in the FX markets.

The USD/JPY climbs for the fourth consecutive day, thought retreats from around YTD highs reached on Wednesday at 144.99, clinging to the 144.00 figure, after Fed officials reiterated their commitment to bringing inflation down toward its 2% goal.

During the day, the USD/JPY began trading near the 144.00 figure, climbing late in the Asian session towards the daily high. Nevertheless, it tumbled towards the daily low at 143.32, but Fed’s Powell remarks before Wall Street opened bolstered the USD/JPY above the 144.00 figure. At the time of writing, the USD/JPY is trading at 144.00.

USD/JPY rises due to upbeat mood, reaching a 24-year high around 145.00

Risk appetite is positive through the Thursday session. Fed officials throughout the day remained vocal about tackling inflation, while Fed Chair Jerome Powell emphasized the Fed needs to act forthrightly, strongly as we have been doing.”

Data-wise, the US Bureau of Labor Statistics revealed that unemployment claims for the week ending on September 3 dropped to 222K from 235K estimated, flashing the labor market remains robust. The four-week moving average, which smooths out volatile week-to-week moves, decreased to 233K – the lowest since early July.

On the Japanese side, the Vice finance minister for international affairs, Masato Kanda, said that “volatility is recently heightening in the currency market. Especially in the past few days, we’ve seen one-sided, rapid yen declines driven by speculative moves. It’s clearly a move that can be described as excess volatility.”

"The yen's recent rapid moves cannot be justified by fundamentals," Kanda added after attending a meeting with officials of the Ministry of Finance, the Bank of Japan (BoJ), and the Financial Services Agency (FSA).

Meanwhile, the USD/JPY has retreated from around 145.00 due to the overextended move towards 24-year highs. Also, the Relative Strength Index (RSI) in overbought conditions is at 78.58, but its slope still points upward, meaning that buying pressure stills. However, Japanese authorities threatening to intervene in the Forex market might refrain USD/JPY traders from opening long bets on the major.

USD/JPY Key Technical Levels