• USD/JPY encountered some supply on Friday, snapping a three-game winning streak and hitting a high for the year.

• The market is worried that the Bank of Japan's intervention will benefit the yen and suppress the dollar/yen amid the low price of the dollar.

• Ahead of the release of the US PCE price index, the divergence in the policy outlook between the Federal Reserve and the Bank of Japan should prevent USD/JPY from falling.

During the Asian session on Friday, the U.S. dollar/yen fell lower and now seems to have interrupted its three consecutive gains, falling to around the 150.75-150.80 area, the highest level since October 2022 hit the day before. However, USD/JPY can still hold above the psychological 150.00 mark as investors are watching the US PCE price index before preparing for directional USD/JPY moves.

Meanwhile, speculation that the Japanese government will intervene in FX markets to stem further weakness in the Japanese yen (JPY) has put some pressure on the USD/JPY pair amid subdued U.S. dollar movements. That said, the sharp differences between the Federal Reserve (Fed) and the Bank of Japan (BoJ) on monetary policy stances should help limit the downside for USD/JPY. Investors may also avoid placing aggressive bets ahead of next week's central bank event risks - Tuesday's Bank of Japan meeting and Wednesday's crucial Federal Reserve decision.

From a technical perspective, USD/JPY showed some resilience after falling below the 100 hour simple moving average (SMA) overnight. The said support currently sits around 150.00 and should now become a key level for day traders, as a break below this level could accelerate USD/JPY's decline towards the uptrend line support at 149.65. Some follow-through selling would serve as a new trigger for bearish traders and open the door for USD/JPY to fall towards the 149.30 support and then the 149.00 round figure.

If USD/JPY continues its downward trend, it may continue to fall to the next relevant support level near 148.70, and then fall to the 148.25 level area and 148.00 mark in sequence. USD/JPY may eventually fall to the monthly swing low of 147.30-147.25 reached on October 3rd.

On the other hand, the annual high reached on Thursday near the 150.75-150.80 area appears to constitute adjacent resistance, followed by the 151.00 mark. If there is some follow-through buying in USD/JPY, it could push USD/JPY towards the multi-decade high of 152.00 hit in October 2022.

USD/JPY hourly chart

Key technical level

USD/JPY