Japanese Yen remains firm against US Dollar amid hawkish BoJ bets, US PPI data eyed

The Japanese Yen (JPY) has maintained its upward trend against the US Dollar (USD) for over a week, with the USD/JPY pair near 153.45, close to its six-month low of 152.89. The Bank of Japan (BoJ) is expected to continue its monetary tightening, having raised interest rates by 25 basis points (bps) to 1.25% in the policy meeting on September 18.

Analysts predict that the BoJ will likely hike rates again at the upcoming meeting on September 17-18, with a 96% probability according to Commerzbank. This hawkish stance continues to support the Yen. Meanwhile, the US Dollar (USD) faces pressure following strong United States Nonfarm Payrolls (NFP) data, which has raised expectations of hawkish Federal Reserve (Fed) interest rate hikes.

The CME FedWatch tool shows a 61.2% probability of a Fed rate hike next week, while a Reuters poll indicates that 65 of 93 economists expect the Fed to hold rates steady. The US Producer Price Index (PPI) data for August will be released later in the day, which will influence USD/JPY. In the near term, USD/JPY is trading at 153.64, below the 20-day Exponential Moving Average (EMA) of 157.23, and remains pinned near recent lows.

Technical analysis suggests that a break above the 20-day EMA could alleviate current bearish pressure, while a sustained drop below 153.64 would expose lower lows.