The USDJPY pair reacted to the 200-bar moving average on the 4-hour chart after the U.S. PPI release. This drove the pair higher to test the 100-bar moving average at 147.813, where sellers stepped in, with last week’s swing highs at 147.887 just above. This upward movement positioned the pair between the 100- and 200-bar moving averages, outlining last week’s trading boundaries. Previous upward pushes above these averages reached targets of 148.58 and 148.779, but sellers regained control. A recent dip to the 200-bar MA quickly rebounded, indicating to traders that they should watch for the next major movement between these averages.

US Yields Rising

U.S. yields are climbing, which supports the USDJPY. The 2-year yield is at 3.744%, up 5.8 basis points. The 5-year yield rose by 5.4 basis points to 3.825%. The 10-year yield stands at 4.296%, gaining 5.7 basis points. Lastly, the 30-year yield is at 4.82%, up by 5.5 basis points. The USDJPY remains caught between its 100-bar and 200-bar moving averages, forming a tight range around 147.80. The price hasn’t broken out in either direction this week, showing clear market indecision. Traders should monitor for a decisive move outside this range for the next direction. This upward pressure is supported by rising U.S. bond yields, which are crucial for this pair. The U.S. Consumer Price Index for July, released on August 12, 2025, came in at 3.4%, a bit higher than the 3.3% analysts had predicted. This ongoing inflation suggests the Federal Reserve is unlikely to cut interest rates soon, maintaining support for the dollar. Conversely, the Bank of Japan continues its very loose monetary policy, widening the interest rate gap between the two countries. This divergence makes the U.S. dollar more appealing than the Japanese yen. The current situation implies that any break from this range is more likely to be upward.

Derivative Trading Opportunities

For derivative traders, the narrow range probably pushed implied volatility down, making options strategies more appealing. A long straddle could be a good choice to profit from a significant breakout in either direction while taking advantage of current market uncertainty. Alternatively, those who believe in the underlying fundamentals might prefer bull call spreads to bet on a price increase while managing their risk. In the broader context, notable resistance is around the 151.00-152.00 area, which led to interventions from Japanese authorities in late 2022 and early 2023. If the price breaks above, this historical zone will be the next major target. Traders should be prepared for increased volatility and the potential for official action as prices approach these levels. Create your live VT Markets account and start trading now.

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