Japanese Yen stays subdued below 161.90 as Fed caution limits Dollar weakness

• USD/JPY trades slightly lower below 161.90 as the Yen gains modest support.
• Softer ADP data points to cooling US labor momentum, but the US Dollar holds firm.
• Fed Williams’ inflation warning and the risk of Japanese intervention keep traders cautious near 162.00.

USD/JPY trades slightly negative below the 161.90 area as the Japanese Yen (JPY) finds modest support, while the US Dollar (USD) remains underpinned by cautious remarks from New York Fed President John Williams and lingering inflation concerns.

The latest United States (US) labor data showed that the ADP Employment Change 4-week average eased to 21K from 24.25K, pointing to a softer pace of private hiring. The figure suggests that labor market momentum is cooling, which could normally weigh on the Greenback. However, the USD avoided a deeper pullback as investors continued to price in a Federal Reserve (Fed) focused on supressing inflation.

Williams said the US economy continues to expand at a steady, trend-like pace, while the labor market remains stable. However, he warned that inflation is still elevated, reinforcing the need for the Fed to keep policy restrictive. He also said monetary policy is well positioned to achieve the central bank’s goals, adding that future decisions will depend on incoming data and evolving risks.

On the Japanese side, the Yen remains supported by intervention concerns after USD/JPY recently approached multi-decade highs. Reuters reported last week that Japanese Finance Minister Satsuki Katayama said authorities remain ready to respond to excessive foreign exchange moves and are in close contact with US officials. This keeps traders cautious about chasing USD/JPY higher near the 162.00 region.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 161.89, holding a bullish near-term bias as it remains above both the 20-period and 100-period Simple Moving Averages (SMAs) at 161.65 and 161.50 respectively. The pair is consolidating just under recent highs, with the Relative Strength Index (RSI) easing back below 51, which suggests momentum has normalized from prior overbought extremes.

On the topside, initial resistance appears at the horizontal barrier around 162.02, followed by a nearby cap at 162.18 before a stronger hurdle emerges at 162.43. On the downside, minor support is seen at the latest price floor near 161.89, ahead of the horizontal support at 161.82. The clustered 20-period and 100-period SMAs at 161.65 and 161.50 are expected to reinforce a broader demand zone on deeper pullbacks.

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