• USD/JPY trades near 163.00 after briefly reaching 163.04, its highest level since December 1986.
• Softer US labor and inflation data limit Fed tightening expectations, but persistent Yen weakness keeps intervention risks elevated.

USD/JPY trades higher near 163.00 on Tuesday after briefly reaching 163.04, marking its first move above the 163.00 level since December 1986. The US Dollar (USD) remains supported by safe-haven demand as investors assess renewed Middle East tensions and rising Oil prices.

The pair advanced despite signs of softer US labor-market momentum. The ADP Employment Change four-week average declined to 16.5K from 19.25K, suggesting that private-sector hiring continues to cool.

Recent softer US inflation data has also limited expectations of further aggressive Federal Reserve (Fed) tightening. However, geopolitical uncertainty and persistent weakness in the Japanese Yen (JPY) continue to dominate, keeping USD/JPY near multi-decade highs and increasing the risk of intervention from Japanese authorities.

Yen underperforms as Japan data loom and intervention risk stays on radar

Strategists at Scotiabank highlight that the Yen’s underperformance against the US Dollar is keeping policymakers firmly in focus, noting they “remain concerned about the possibility of official intervention, or at the very least comments threatening potential action.” They add that the immediate data calendar offers few distractions, with “overnight releases…limited but Japan is scheduled to deliver its June trade figures at 7:50pm ET, ahead of CPI data later in the week,” events that could further shape market expectations around potential MoF responses to currency moves.

Short-term technical analysis:

On the 4-hour chart, USD/JPY trades at 162.97, holding a bullish near-term bias as it remains above both the 20-period Simple Moving Average (SMA) at 162.45 and the 100-period SMA at 162.15. The pair is pressing into overhead supply just beneath the horizontal resistance at 163.04, while the Relative Strength Index (RSI) extends into overbought territory around 73, hinting at strong but stretched upside momentum that could slow fresh gains.

On the downside, immediate support is seen at the nearby horizontal level at 162.94, followed by deeper cushions at 162.75 and 162.59, which align beneath the short-term 20-period SMA at 162.45 and the medium-term 100-period SMA at 162.15 to reinforce the broader constructive structure.

On the topside, a clear break above 163.04 would open the way for further appreciation, while failure to overcome this barrier could trigger consolidation or a corrective pullback toward the clustered supports below.

(The technical analysis of this story was written with the help of an AI tool. Know more.)