Created on October 01, 2026

• The U.S. dollar has fallen against the Japanese yen during trading on Wednesday as we continue to see a lot of volatility in the bond markets.

  

• Quite frankly, part of what we are seeing is a situation where traders are looking to see whether or not the Federal Reserve will have to continue hiking rates.

The fact that the core PCE numbers came out lower than anticipated does suggest that maybe the Federal Reserve may not have to be as aggressive as once feared. That being said, I only read so much into that, and I recognize that traders will continue to see this as a market that remains held hostage by interest-rate expectations out of the United States, along with energy inflation, which has a lot to do with that as well. Then, of course, there is the Bank of Japan and whether or not they are going to get involved in the market.

Previous intervention

The recent USD/JPY action that we had seen coming from Japan intervening in the currency market to save the Japanese yen has rattled the market, but now we find ourselves sitting just below the 200-day EMA and the 50-day EMA near the ¥158 level. With that being said, I like the idea of taking advantage of short-term dips to continue to buy into this market, as we see a lot of upward pressure on the U.S. dollar from the longer-term standpoint.

But perhaps more importantly, we have a situation where the Japanese will be hard-pressed to truly hike rates with any type of seriousness over the next several months, if not years. After all, the debt levels in Japan are historically bad, and they are only getting worse. It becomes very difficult to finance those debts at those extraordinarily high levels.

So, with that being said, I still favor going against the Japanese yen, although I do recognize that there could be some problems along the way.

Want to trade our USD/JPY forex analysis and predictions? Here’s a list of forex brokers in Japan to check out.

Christopher Lewis is a technical analyst and market commentator at DailyForex with more than two decades of trading experience in Forex and other leveraged markets. Based in Columbus, Ohio, he specializes in chart-based analysis of major currency pairs, stock indices, commodities, and energy markets, focusing on clear support and resistance levels, trend structure, and risk management. Christopher produces daily written and video analysis for traders who rely on technical setups to navigate volatile market conditions

As seen on: Pairs Of Aces Podcast,The Trader Guy, FXEmpire