Japan’s 10-year government bond yield has reached 3% for the first time since 1996, but the Japanese Yen remains under pressure against the US Dollar. USD/JPY is approaching the key 160 level as traders assess rising Japanese yields, expectations for further Bank of Japan tightening, and growing pressure from US officials for a stronger Yen.
USD/JPY rose to around 159.85 during early European trading on Tuesday, September 1, recovering steadily after falling toward 157.00 in late July. The rebound shows that buyers have regained some control, although the pair is now approaching a technically important resistance zone.
The rise in Japanese bond yields follows comments from US Treasury Secretary Scott Bessent, who said he expects the Japanese government and the Bank of Japan to take action that would support a stronger Yen. Japanese Finance Minister Satsuki Katayama also said she met with Bessent and agreed that orderly Yen movements are important for global financial stability.
Attention is increasingly turning to the BoJ’s September 18 policy meeting. Scotiabank strategists said relative central-bank policy remains a key factor for USD/JPY, while comments from Bessent have added external pressure on Governor Kazuo Ueda. Investors will also monitor comments from BoJ board member Takata later this week for clues about the central bank’s policy direction.
Technical Analysis
USD/JPY is showing a gradual bullish recovery after finding support near 157.00 in late July. The pair has climbed back toward 160.00 and is currently trading around 159.94, slightly above the 50% Fibonacci retracement level at 159.59. Holding above this level would keep the short-term recovery intact and shift attention toward the 61.8% Fibonacci level at 160.62, followed by 160.97.
Momentum indicators also favor the recovery. The RSI has risen to 51.66 after previously moving into oversold territory, returning above the neutral 50 mark and signaling improving buying momentum. The MACD histogram has also turned positive, indicating that bullish momentum is strengthening following the sharp selloff in late July. However, the MACD lines remain below zero, suggesting that the broader trend has not yet turned decisively bullish.
The first major hurdle is the 160.00 psychological level. A decisive daily close above 160.00 could strengthen the bullish setup and expose 160.62–160.97 next. A sustained break above 160.97 would bring the 162.08 area into focus.
On the downside, 159.59 is the first important support. A move back below this level would weaken the recovery and expose 158.56, followed by 157.29. A break below 157.29 would significantly undermine the rebound and suggest that sellers are regaining control.
For traders, the setup remains cautiously bullish while USD/JPY holds above 159.59, but the 160.00–160.97 area is likely to determine the next major direction. The combination of Japan’s 10-year yield reaching 3%, expectations for further BoJ policy normalization, and US pressure for a stronger Yen makes this setup particularly important. A sustained break above 160 could reinforce bullish momentum, while rejection at resistance followed by a move below 159.59 could signal a stronger Yen recovery.
