Japanese Yen advances as Bessent expects further strengthening

• USD/JPY retreats to 159.80 on Monday after briefly moving above the psychological 160.00 level.
• Scott Bessent expects Japanese authorities to take measures that will lead to a stronger Japanese Yen.
• Investors now turn to US manufacturing activity and labor market data for fresh direction.

USD/JPY declines 0.21% on Monday and trades around 159.80 at the time of writing, after briefly moving above the psychological 160.00 level. The Japanese Yen (JPY) attracts fresh buying as comments from US Treasury Secretary Scott Bessent reinforce expectations that authorities could support the Japanese currency.

Bessent said on Monday that he believes the Japanese government and the Bank of Japan (BoJ) will take measures that will lead to a stronger Japanese Yen. His comments come as the weakness of the Japanese currency remains in focus following the recent surge in USD/JPY toward levels that have previously prompted authorities to intervene in the foreign exchange market.

Concerns over another intervention remain elevated following USD/JPY's move above 160.00. Data from Japan's Ministry of Finance released on Friday showed that Japan spent a record ¥15.4 trillion between July 30 and August 26 to support its currency after the pair reached a multi-decade high near 164.00.

Expectations surrounding Japanese monetary policy also provide some support to the Japanese Yen. Investors anticipate a more restrictive stance from the Bank of Japan, although the country's expansionary fiscal policy, high level of government debt and still relatively low interest rates continue to limit the currency's appreciation potential.

Meanwhile, the US Dollar (USD) trades lower, adding further downside pressure to USD/JPY. Investors now turn to a series of US economic releases that could influence expectations surrounding the interest rate outlook.

The Institute for Supply Management (ISM) is scheduled to release its Manufacturing Purchasing Managers Index (PMI) for August on Tuesday, while the July Job Openings and Labor Turnover Survey (JOLTS) will provide fresh clues about the health of the US labor market. These releases could determine whether the current weakness in the US Dollar persists and, consequently, whether USD/JPY can extend its decline below 160.00.

USD/JPY technical analysis

In the one-hour chart, USD/JPY trades at 159.74, holding a mildly bullish near‑term bias as it remains above the 100-hour simple moving average (SMA) at 159.47 and the 200-hour SMA at 159.17, as well as the rising trend-line support around 159.55. The Relative Strength Index (RSI) at 47.82 sits just below the neutral 50 mark, hinting at consolidative rather than impulsive momentum after the recent pullback from the 160.20 horizontal cap.

On the topside, initial resistance is seen at the horizontal barrier near 159.92, ahead of the recent swing high at 160.20, where buying interest has so far stalled. On the downside, immediate support is provided by the trend-line zone around 159.55, followed by the 100-hour SMA at 159.47 and the deeper 200-hour SMA near 159.17, where a break would weaken the current constructive tone and expose a broader corrective phase.

(The technical analysis of this story was written with the help of an AI tool. Know more.)