USD/JPY has rebuilt from the 152.88 low to 157.25 and holds above its SMA20, helped by a hiking Fed and US 10-year yields above 5.2%. The BoJ's 1.25% rate, the highest since 1995, and swing highs at 159.77-160.38 cap rallies, so TNFX Research favours a measured climb toward 158.76 into the 28 Oct FOMC.
This week: Two-way trade between 155.11 (weekly S2) and 159.76 (1-week sigma high), tilted higher while 156.13 holds. A firm NFP on 2 Oct targets 158.38 then 159.76; a miss risks 155.11.
End of October: Base case: an end-October close near 158.76 (weekly R1). The FOMC on 28 Oct and the BoJ on 29-30 Oct land in the final days, so expect a wide swing into month-end.
Key levels
Resistance
- R1158.38
- R2159.77
- R3160.38
Support
- S1156.13
- S2155.11
- S3152.88
Scenarios
- Trigger
- Strong NFP and a hot CPI push the US 10-year further above 5.2%, and the BoJ signals no rush
- Target
- 161.15
USD/JPY clears the 160.38 20-day high and extends to 161.15 (last plus 3x ATR) into month-end.
- Trigger
- The 28 Oct Fed hike stays priced and the BoJ keeps to gradual steps
- Target
- 158.76
Dips hold the 156.13 SMA20, the pair reclaims the 158.38 SMA50 and settles near the weekly R1 at 158.76, with 159.77-160.38 capping.
- Trigger
- A soft NFP and CPI cut Fed hike odds and the BoJ leans hawkish on 29-30 Oct
- Target
- 154.65
A break of 156.13 and 155.11 sends USD/JPY to 154.65 (last minus 2x ATR), with the 152.88 low the next support.
What drives it
- Fed at 3.75-4.00% with a second hike ~70-77% priced for 28 Oct keeps the rate gap wide against the BoJ's 1.25%
- US 10-year above 5.2%, the highest since June 2007, underpins dollar demand against the yen
- BoJ hiked to 1.25% on 18 Sep (7-2); the 29-30 Oct meeting is the main downside risk
- Swing highs at 159.77 and 160.38 have capped rallies; swing lows at 155.22 and 152.88 form the base
Dates to watch
US jobs report (NFP, September), 15:30 Mecca timeConsensus +90k, unemployment 4.1%. A firm print lifts US yields and USD/JPY toward 158.38.
US CPI (September)August CPI was 3.4% y/y with energy +16.3%. A hot print supports the yield gap.
FOMC decisionA second 25bp hike is ~70-77% priced; hawkish guidance favours the upside scenario.
BoJ decision (meeting 29-30 Oct)At 1.25% after the 18 Sep hike; a signal of further tightening is the biggest threat to the bullish call.
Technical picture
Price sits between the SMA20 (156.13) and the SMA50 (158.38). RSI14 49.9 is neutral after the rebound from 152.88. ATR14 1.30 (0.82%), an average daily range of about 1.3 yen; 20-day vol 0.71%/day.
What would change our view
A daily close below 155.11 (weekly S2) flips the bias bearish. A soft NFP plus a hawkish BoJ on 29-30 Oct could send it back to the 152.88 low.