Breaking: USD/JPY teases Japan intervention on crossing 146.00 hurdle to renew 24-year high

• USD/JPY rises for the sixth consecutive day to refresh multi-year high.
• Rebound in Treasury yields, risk-off mood and the hawkish Fed bets favor bulls.
• Japan data, Tankan survey adds strength to the upside momentum.
• Bulls will look for hawkish Fed Mintues but Japan’s bond move could probe the upside moves.

USD/JPY bulls keep the reins as they pierce the 145.90 resistance to print the highest levels since 1998 during Wednesday’s Asian session, retreating from 146.23 to 146.00 by the press time. In doing so, the yen pair tracks firmer yields and the hawkish Fed bets to push the Japanese policymakers towards one more market intervention to defend the yen. Also fueling the prices could be the downbeat catalysts from Japan.

Japan’s Machinery Orders for August posted their biggest single-month fall in six months while flashing -5.8% MoM print. That said, the yearly figures were also disappointing and lagged behind 12.6% market forecasts, as well as 12.8% prior.

Elsewhere, Reuters mentioned that a monthly poll that tracks the Bank of Japan's (BOJ) closely-watched Tankan quarterly survey, found manufacturers' mood expected to deteriorate again over the coming three months while the service-sector mood was seen rebounding further.

On the other hand, the US 2-year Treasury yields reversed the previous day’s pullback from a two-week top earlier in the day, easing back to 4.30% at the latest.

Talking about the Fed bets, CME’s FedWatch Tool signals a nearly 78% chance of the Fed’s 75 basis points (bps) of a rate hike in November. Furthermore, US inflation expectations, as per the 10-year breakeven inflation rates per the St. Louis Federal Reserve (FRED) data, rose to the highest levels since September 28 while flashing 2.31% level at the latest, which in turn favor the USD/JPY bulls.

Additionally, the global growth fears, raised by the International Monetary Fund’s (IMF) latest projections also favor the pair buyers. On Tuesday, the IMF lowered the global economic growth forecast for 2023 to 2.7% from 2.9% estimated in July while citing pressures from high energy and food cost, rate hikes as the key catalysts for the move. It’s worth noting that the Washington-based institute left the 2022 growth forecast unchanged at 3.2% versus 6.0% global growth in 2021."

Looking forward, USD/JPY traders should pay attention to any moves from Japanese policymakers to defend the yen, via market intervention. Also important will be the yields and the Federal Open Market Committee (FOMC) Meeting Minutes.

Technical analysis

USD/JPY needs to stay beyond the previous multi-year peak of 145.90 to direct the bulls toward the one-month-old resistance line, around 146.90 at the latest.