USD/JPY hits new YTD high on high US bond yields, capped by threats of intervention

• USD/JPY reaches a new year-to-date high at 149.18, underpinned by high US yields.
• The Federal Reserve’s upward revision to the Federal Funds rate (FFR) next year has boosted the USD to new yearly highs.
• Japanese authorities are concerned over 'excessive volatility,' led by Prime Minister Fumio Kishida and Finance Minister Shunichi Suzuki.

USD/JPY pushes to a new year-to-date (YTD high of 149.18, though traders remain cautious given Japanese authorities' expressions about “undesirable” and “excessive” moves in the Forex markets. Nevertheless, the Greenback remains in the driver’s seat, underpinned by elevated US Treasury bond yields. The pair continues to trade above the 149.00 mark, registering minuscule gains of 0.12%.

The Yen weakens but remains boosted by Japanese authorities' verbal intervention

The Japanese Yen (JPY) fall remains cushioned by expressions of Japanese authorities, as its Finance Minister Shunichi Suzuki commented, “Excessive volatility is undesirable.” The latest Japanese official that talk up the Yen was Prime Minister Fumio Kishida, who also ordered his cabinet to prepare a new economic package to ease inflation's pain, including food and energy.

Aside from this, the Greenback extended its gains, as US Treasury bond yields remain underpinned by expectations that interest rates would be “higher for longer,” as said by the US Federal Reserve Chair Jerome Powell.  Given the Fed reviewed its forecast for 2024 to hold rates above the 5% threshold, investors reacted accordingly, lifting US bond yields higher; therefore, the US Dollar rose.

After the Fed’s decision, some of its policymakers said the US central bank needs to be patient, but the majority foresees an additional rate hike toward the end of 2023.

US Consumer Confidence deteriorated in September on the data front, as the Conference Board (CB) revealed. The CB Consumer Confidence slowed to 103 from 108.7 in August and missed estimates of 105.5, as Americans remain pessimistic about the economy.

Further housing data revealed was mixed, with Building Permits increasing while Home Sales plummeted, spurred by higher mortgage rates.

USD/JPY Price Analysis: Technical outlook

From a technical standpoint, the USD/JPY is set to test the 150.00 waters in the near term, but intervention threats could suggest a nimble approach to that level. A breach of that area, the next resistance would be the October 21 high at 151.94, followed by the 152.00 mark. Conversely, if the major drops below the Tenkan-Sen at 148.10, that could pave the way toward the latest cycle low witnessed at 144.44, the September 1 swing low. However, on its way south, sellers would face key support levels, like the Kijun-Sen at 146.82, followed by the 145.00 psychological level.