Following Jackson Hole, the market has moved into wait-and-see mode ahead of the US employment report and CPI releases. The US dollar is expected to remain firm, while the yen is likely to continue trading around the ¥160 level.
Last week's fundamentals saw the US dollar strengthen following hawkish comments from Chair Warsh, while movements in US interest rates also affected the yen. During the week of 24 August, rising US interest rates and stronger US dollar buying pushed up the pricing of a September rate hike in Fed funds futures, while uncertainty remained over the market's direction after the events had passed. Against this backdrop, markets are expected to focus this week on determining whether intervention will take place and at what level, ahead of the US employment report and CPI releases.
This week's focus is the Japan-US interest-rate differential and intervention risk. The total value of coordinated interventions since 28 August stands at approximately ¥15.4 trillion, among the largest on record, while the cumulative total for 2026 has also reached approximately ¥27.1 trillion. The market is expected to continue trading around the ¥160 level, bringing renewed attention to whether intervention will be conducted and its scale. Depending on the results of the upcoming employment report and CPI, demand to sell the yen could increase further.
Technically, USD/JPY is tracking the movements of its moving averages on both the daily and weekly charts. The focus on the weekly chart is whether it can break above the 20-week moving average and confirm the continuation of the uptrend. On the daily chart, the golden cross remains in place, but a major move is considered unlikely ahead of the employment report. EUR/USD and EUR/JPY continue to show gaps between their long- and short-term indicators.