Japanese Yen weakens as 10-year bond yield hits 3% for first time since 1996

The USD/JPY pair edges higher to around 159.85 during the early European trading hours on Tuesday. Japan’s 10-Year bond yield hit 3% for the first time in three decades after US Treasury Secretary Scott Bessent signaled that the United States (US) wants the Bank of Japan (BoJ) to raise interest rates more aggressively.

Bessent said on Tuesday he believes the Japanese government and central bank will take action that leads to a stronger Japanese Yen (JPY), per CNBC. However, the JPY remains weak against the US Dollar (USD) despite Bessent’s comments. 

Japanese Finance Minister Satsuki Katayama said that she met with Bessent and agreed that orderly JPY movement is critical for global market stability. The US and Japan also confirmed that continued and cooperative measures would contribute to this common goal. 

Yen focus stays on BoJ as US officials urge Ueda to ‘do the right thing’

Strategists at Scotiabank note that the “outlook for relative central bank policy remains front and center into the BoJ’s September 18 decision,” with attention increasingly drawn to international commentary on the Bank of Japan’s next move. They highlight media reports that US Secretary Bessent expects Governor Ueda “to do the right thing,” underscoring the external pressure surrounding the meeting. Scotiabank also points out that Board member Takata is scheduled to speak later this week, an appearance that could help shape expectations ahead of the September policy decision.

Technical Analysis: USD/JPY remains capped under the 100-day SMA

In the daily chart, USD/JPY holds a capped tone as it sits under the 100-day moving average (MA) and the upper Bollinger band. Price remains above the 20-day Bollinger middle band, suggesting underlying demand, while the Relative Strength Index (RSI) at 50.75 leans slightly positive but does not yet point to strong directional conviction.

On the topside, immediate resistance is located at the 100-day MA at 160.00, followed by the upper Bollinger band around 160.35, where renewed selling pressure could emerge. On the downside, initial support aligns with the 20-day Bollinger middle band at 159.15, ahead of a deeper cushion at the lower Bollinger band near 157.90, where buyers would be expected to defend the broader uptrend.