USD/JPY climbed above the 159.00 threshold on Thursday, extending gains and recovering much of the prior session’s decline. The upside was driven primarily by a stronger US Dollar rather than Japanese domestic factors, with the Greenback rebounding from a three-month low.
US Dollar resilience improved as US Treasury yields recovered from Wednesday’s sharp drop, following the Treasury’s decision to expand liquidity-support buybacks of longer-dated debt. Upcoming labor data also supported the currency, with weekly Initial Jobless Claims coming in below forecasts and reinforcing the case for the Federal Reserve to hold rates next month. The US Dollar Index (DXY) rebounded toward the 98.90 level after touching its weakest point since mid-May.
However, the Japanese Yen remained under pressure, posting as the weakest major currency on the day. Elevated oil prices pose an immediate headwind, given Japan’s heavy reliance on energy imports. July trade data highlighted the strain, showing imports surging due to higher energy costs and the country running a significant trade deficit. Over the longer term, fiscal concerns and persistently low interest rates continue to weigh on the currency.
Short-term technical analysis:
On the 4-hour chart, USD/JPY trades at 159.12, holding a mild bullish near-term bias as it stays above both the 20-period Simple Moving Average (SMA) at 159.10 and the 100-period SMA at 159.09. The latest 14-period Relative Strength Index (RSI) at 52.67 sits in neutral territory with a slight positive tilt, suggesting steady upside pressure while the pair consolidates just under nearby resistance.
On the topside, initial resistance appears at the horizontal barrier at 159.19, where a clear break would open the way for further gains. On the downside, immediate support is clustered around the short-term averages at 159.10 and 159.09, followed by layered horizontal floors at 158.98, 158.85 and 158.66, which together underpin the constructive tone while price holds above them.