The USD/JPY pair surged past 149.00 on Wednesday, reaching its highest level since mid-August, driven by a sharp rise in U.S. Treasury yields and dovish signals from incoming Japanese Prime Minister Shigeru Ishiba. The pair traded around 149.31, as investors reacted to elevated U.S. yields, which have a close positive correlation with the USD/JPY.
U.S. Treasury yields have been climbing as markets digest the Federal Reserve’s stance on future interest rate cuts, with higher yields making the U.S. dollar more attractive relative to the yen. This, combined with Ishiba’s dovish comments on monetary policy, provided the necessary momentum for the dollar to break key resistance levels against the yen.
Technically, the pair’s outlook remains neutral to upward, having cleared key resistance levels such as the 50-day moving average (DMA) and entering the Ichimoku Cloud (Kumo). The Relative Strength Index (RSI) indicates that buyers are still in control, with the indicator far from overbought levels, suggesting the rally could extend further.
If the USD/JPY continues its ascent, breaking above the August 15 high of 149.39, it could expose the psychologically significant 150.00 level. A sustained move beyond this could bring the 200-DMA at 151.39 into play, a level that has not been tested in months.
On the downside, sellers would need to push the pair below the recent low of 147.35 to regain control. A break below this level could drive the pair toward the bottom of the Kumo at 146.40-60, with further support seen at the Tenkan-Sen around 145.50.
As markets eye both U.S. economic data and Japan's evolving political landscape, the USD/JPY remains in focus, with traders monitoring whether the dollar can maintain its momentum or if the yen will regain some strength.
