The dollar rose slightly against the yen, with intervention warnings failing to shake the upward trend.
2026-05-29 13:20:18
On Friday (May 29) during Asian trading hours, the USD/JPY pair continued its slight upward trend. The yen weakened due to factors such as weaker inflation data and external geopolitical tensions, coupled with verbal warnings from the Japanese Finance Minister regarding foreign exchange market intervention, significantly intensifying the battle between bulls and bears in the market. Meanwhile, the US dollar index rebounded slightly after a sharp drop in the previous trading day. Technically, the short-term bullish trend for USD/JPY remains unchanged, and the exchange rate still has the potential to reach new highs. Intervention expectations and technical movements will continue to dominate market movements.
On Friday during Asian trading hours, the US dollar rose slowly against the Japanese yen, reaching a high of 159.373.
The divergence in this round of trends was primarily influenced by the latest inflation data from Japan. The Tokyo core consumer price index (excluding fresh food), which is closely monitored by the Bank of Japan, was released. In May, the year-on-year increase was only 1.4%, which was not only lower than the general market expectation, but also a decline from the 1.5% figure in the previous month.
The situation between the US and Israel regarding Iran has led to an increase in the cost of commodities and raw materials. However, subsidies for fuel and education have offset the pressure from the price increases, causing Tokyo's core CPI to remain below the Bank of Japan's 2% inflation target for the fourth consecutive month. This weak inflation performance significantly reduces the probability of Japan tightening its monetary policy in the short term. The yen has lost fundamental support, and its overall trend is cautiously weak.
Following the release of inflation data, Japanese Finance Minister Satsuki Katayama publicly warned regulators that they would intervene in the foreign exchange market to curb the unusually sharp fluctuations in the yen's exchange rate. This verbal statement made market participants more cautious and limited the unilateral rise of the dollar against the yen.
Looking at the overall trend of the US dollar, the dollar index, which measures the dollar's performance against six major currencies, rose slightly to around 99.00, still close to the low of 98.95 reached on Thursday. The previous trading day saw news that the US and Iran had drafted a text of an agreement, awaiting only approval from US President Trump. This news triggered a large-scale sell-off of the dollar, causing a sharp decline in the dollar index and creating potential volatility in the foreign exchange market.
From a technical perspective, the USD/JPY pair traded around 159.30 during the Asian session, maintaining a healthy short-term bullish trend. Currently, the exchange rate is stable above the 20-day exponential moving average at 158.78, which forms the core support for the short-term trend. Even with increased market volatility, the upward momentum remains intact.
The Relative Strength Index (RSI) reading remains around 56, reflecting that market momentum is within a reasonable range and there is no overbought condition, indicating that the exchange rate still has room to rise further. Regarding support levels, the 20-day exponential moving average at 158.78 is the first defensive level, where bulls are likely to exert force to defend the price; if the price breaks below this level, a deeper correction will begin, with the next target being the May 6 high of 157.94. On the resistance side, USD/JPY is expected to launch another attack, challenging the near two-year high of 160.74.
In summary, considering both fundamental and technical factors, weak Japanese inflation data and expectations of further monetary easing remain the core factors suppressing the yen, while the short-term upward trend of USD/JPY remains stable. Although the Japanese government signaled intervention in the foreign exchange market, which somewhat dampened bullish sentiment, it did not change the overall trend. Going forward, the market will continue to focus on the evolution of the US-Iran situation, fluctuations in the US dollar index, and whether Japanese regulators will implement intervention measures. With multiple factors intertwined, the pair is likely to continue its high-level consolidation and repeated price action.
USD/JPY Daily Chart Source: EasyForex
At 13:19 Beijing time on May 29, the USD/JPY exchange rate was 159.29/30.
Inflation data fell short of expectations, and the yen's fundamentals continued to weaken.
On Friday during Asian trading hours, the US dollar rose slowly against the Japanese yen, reaching a high of 159.373.
The divergence in this round of trends was primarily influenced by the latest inflation data from Japan. The Tokyo core consumer price index (excluding fresh food), which is closely monitored by the Bank of Japan, was released. In May, the year-on-year increase was only 1.4%, which was not only lower than the general market expectation, but also a decline from the 1.5% figure in the previous month.
The situation between the US and Israel regarding Iran has led to an increase in the cost of commodities and raw materials. However, subsidies for fuel and education have offset the pressure from the price increases, causing Tokyo's core CPI to remain below the Bank of Japan's 2% inflation target for the fourth consecutive month. This weak inflation performance significantly reduces the probability of Japan tightening its monetary policy in the short term. The yen has lost fundamental support, and its overall trend is cautiously weak.
Official intervention signals fuel market risk aversion.
Following the release of inflation data, Japanese Finance Minister Satsuki Katayama publicly warned regulators that they would intervene in the foreign exchange market to curb the unusually sharp fluctuations in the yen's exchange rate. This verbal statement made market participants more cautious and limited the unilateral rise of the dollar against the yen.
Looking at the overall trend of the US dollar, the dollar index, which measures the dollar's performance against six major currencies, rose slightly to around 99.00, still close to the low of 98.95 reached on Thursday. The previous trading day saw news that the US and Iran had drafted a text of an agreement, awaiting only approval from US President Trump. This news triggered a large-scale sell-off of the dollar, causing a sharp decline in the dollar index and creating potential volatility in the foreign exchange market.
The technical pattern is bullish, and the short-term upward trend has not been broken.
From a technical perspective, the USD/JPY pair traded around 159.30 during the Asian session, maintaining a healthy short-term bullish trend. Currently, the exchange rate is stable above the 20-day exponential moving average at 158.78, which forms the core support for the short-term trend. Even with increased market volatility, the upward momentum remains intact.
The Relative Strength Index (RSI) reading remains around 56, reflecting that market momentum is within a reasonable range and there is no overbought condition, indicating that the exchange rate still has room to rise further. Regarding support levels, the 20-day exponential moving average at 158.78 is the first defensive level, where bulls are likely to exert force to defend the price; if the price breaks below this level, a deeper correction will begin, with the next target being the May 6 high of 157.94. On the resistance side, USD/JPY is expected to launch another attack, challenging the near two-year high of 160.74.
In summary, considering both fundamental and technical factors, weak Japanese inflation data and expectations of further monetary easing remain the core factors suppressing the yen, while the short-term upward trend of USD/JPY remains stable. Although the Japanese government signaled intervention in the foreign exchange market, which somewhat dampened bullish sentiment, it did not change the overall trend. Going forward, the market will continue to focus on the evolution of the US-Iran situation, fluctuations in the US dollar index, and whether Japanese regulators will implement intervention measures. With multiple factors intertwined, the pair is likely to continue its high-level consolidation and repeated price action.
USD/JPY Daily Chart Source: EasyForex
At 13:19 Beijing time on May 29, the USD/JPY exchange rate was 159.29/30.
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