Possible Bank of Japan rate hike: Can USD/JPY avoid deeper losses?

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Dollar vs Yen rises 0.54% today

Highlights

The US Treasury tripled its bond buyback to $6 billion, increasing Dollar demand and supporting market liquidity.
Statements from Treasury Secretary Bessent and potential Bank of Japan coordination introduce two-way risk for Dollar versus Yen, with market focus on possible Bank of Japan rate hikes.
USD/JPY shows sustained short- and medium-term bullish momentum with a projected range of ¥153.5 to ¥155.24 in the next 2 to 3 sessions.

Dollar support rises on buyback expansion as policy signals amplify two-way risk

The expansion of US Treasury bond buyback operations on Wednesday, with the first buyback size tripled from $2 billion to $6 billion according to Fxstreet, has provided fresh support for the US Dollar by increasing demand for government debt and shoring up market liquidity. At the same time, Treasury Secretary Scott Bessent's public challenge to traders, alongside references to coordination with Japanese officials and the Bank of Japan, has introduced additional two-way risk for Dollar vs Yen, potentially curbing the pace of Yen gains. Meanwhile, reports from Finance Yahoo highlight that market participants are factoring in the likelihood of a Bank of Japan rate hike, which may temper further upside in USD/JPY and keeps longer-term direction finely balanced.

Technical bias favors buyers despite resistance at higher daily averages

On the technical front, USD/JPY trades above the MA-20 at ¥153.7 and MA-50 at ¥153.66 on the hourly chart, while remaining below the MA-200 at ¥158.9 on the daily timeframe. The immediate support is marked by the Ichimoku Kijun at ¥153.89. MACD and ADX both signal positive intraday momentum, although the Stoch RSI is neutral, and the RSI at 55.5 tilts gently bullish. CCI favors buyers, with Bull/Bear Power showing clear intraday buyer dominance, while the Awesome Oscillator is neutral and does not reinforce the prevailing momentum bias.

Range-bound trading expected as upside breakout faces resistance

In the short term, USD/JPY is expected to fluctuate within a corridor of ¥153.5 to ¥155.24 over the next two to three sessions. The up move holds a 74% probability, suggesting a sideways consolidation is the most likely scenario in the near term. A breakout above resistance could lead to a push toward the higher end of the projected range, while a fall below support may prompt a deeper pullback toward ¥153.5.

Anton Kharitonov, expert at Traders Union, sees limited upside for USD/JPY despite recent support from the expanded US Treasury bond buyback. He notes that coordination between US and Japanese officials injects more two-way risk, while anticipation of a Bank of Japan rate hike is keeping the longer-term outlook uncertain. Key technicals show the pair holding above near-term moving averages, but broader resistance and neutral momentum signals limit bullish conviction. "Until USD/JPY decisively breaks out of the ¥153.5–¥155.24 zone, I remain cautious and avoid aggressive positioning."

Earlier, analysts noted that USD/JPY was under persistent selling pressure amid expectations of official intervention and entrenched technical weakness. The current move above short- and medium-term moving averages, supported by broader US policy initiatives, adds a new dimension to the outlook and puts the ¥155.24 resistance under focus as a pivotal level in the sessions ahead.

Source of Data: USD Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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