Japanese Yen exposes to two-week low against US Dollar, US PMI eyed

The Japanese Yen (JPY) continues to underperform against the US Dollar (USD), with the USD/JPY pair trading 0.3% higher to near 157.85 during the European session on Wednesday. The USD/JPY pair is little far from the two-week high of 158.05 posted on Friday. The pair remains firm as the US Dollar continues to outperform due to warnings of persistent United States (US) inflationary pressures from a slew of Federal Reserve (Fed) officials.

An array of Fed members have also stated that not just energy shock but strong demand environment is also fuelling US inflationary pressures.

In European trade, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, posts a fresh seven-week high near 100.89.

Strategists at ING highlight that the Dollar “continues to show very good resilience to lower energy prices and a risk-friendly environment,” arguing this is “another sign that the Fed story is dominant, and the hawkish Fedspeak is enough to keep USD in demand.” They point to comments from Richmond Fed President Thomas Barkin, who “reinforced that message yesterday, arguing that a single rate hike may not be enough to bring inflation under control.” ING notes that Barkin “also noted that resilient labour market conditions should keep consumer spending supported, implying that a dovish shift among the hawks may require clearer signs of labour market softening.”

Meanwhile, investors await the meeting between US President Donald Trump and Chinese leader Xi Jinping, which is due this week.

Later in the day, investors will focus on the preliminary US S&P Global Manufacturing Purchasing Managers’ Index (PMI) data for September. The US Composite PMI is expected to arrive lower due to slowdown in both manufacturing and the service sector activity.

On Tokyo front, financial markets expect Japan’s likely intervention due to severe depreciation in the Japanese Yen in past few weeks.

USD/JPY Technical Analysis

In the daily chart, USD/JPY trades at 157.83, maintaining a mildly bullish near-term bias as spot holds above the 20-day exponential moving average (EMA) at 156.78. The pair is consolidating near recent highs, and the Relative Strength Index (RSI) at 54.14 suggests constructive but not overstretched momentum, hinting that buyers still retain control while upside progress has moderated.

On the downside, initial support emerges at the 157.83 area as a near-term pivot, followed by the 20-day EMA at 156.78 which reinforces the broader positive structure. With no clear overhead technical barriers in the immediate data set, the pair could continue to probe higher levels as long as it sustains above these supports, though momentum readings point more to steady grinding gains than an impulsive breakout.