USD/JPY climbs higher as market awaits Fed Chair Warsh's address

USD:

The greenback has shown varied performance over the past two days, with traders likely taking profits and adjusting positions ahead of Fed Chair Warsh's speech at Jackson Hole later today. He isn't expected to offer forward guidance, but market participants will be watching closely to see if he pushes back against the loosening of financial conditions triggered by the Treasury buyback announcement and Bessent's "verbal" intervention aimed at lowering long-term yields.

If he refrains from doing so, the US dollar could face renewed downside pressure from further financial conditions easing and a dovish shift in short-term interest rate expectations. Conversely, if he pushes back with statements such as "recent easing in financial conditions, if sustained, could complicate the process of returning inflation to our target" or "if recent easing threatens progress toward price stability, we will not hesitate to respond appropriately" and similar language, the market may tighten financial conditions again, providing a boost to the greenback.

JPY:

On the Japanese yen side, the currency continues to weaken due to a lack of changes in the fundamental outlook. The market has largely priced in a Bank of Japan rate hike in September, so this will not alter the situation. A reversal of the current trend seems unlikely without a dovish repricing of Federal Reserve interest rate expectations or a faster pace of tightening by the BoJ.

USDJPY TECHNICAL ANALYSIS – DAILY TIMEFRAME

On the daily chart, USDJPY has been steadily recovering after the intervention, with the first key target being the resistance zone around the 160.50 level. If the price reaches this area, sellers are expected to step in with a defined risk above the resistance, aiming for a decline back toward the 155.00 handle. Buyers, on the other hand, will seek a breakout to increase bullish bets toward new cycle highs.

USDJPY TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

On the 4 hour chart, there is a minor support zone around the 158.50 level. If another pullback occurs toward this support, buyers are likely to step in with a defined risk below it to continue pushing toward new highs. Sellers, meanwhile, will look for a breakdown to target a drop to the 155.00 handle next.

USDJPY TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

On the 1 hour chart, an upward trendline defines the bullish momentum. Buyers will likely continue to rely on this trendline with a defined risk below it to push toward new highs. Sellers, on the other hand, will look for a break below the trendline to target a pullback to the 158.50 support. The red lines mark the average daily range for today.

UPCOMING CATALYSTS

Today, market focus will be on Fed Chair Warsh's speech at the Jackson Hole Symposium. The prepared remarks are usually released either just before or simultaneously with the Fed Chair's delivery of the address.