USD/JPY remains pinned below 160 after U.S. Treasury Secretary Scott Bessent said he expects Japanese government and Bank of Japan policies to support a stronger yen, adding that he is aware of information not yet reflected in markets.

Markets are likely to expect this to mean the Takaichi administration's pro-growth agenda and higher BOJ rates, though a stronger yen may be difficult to achieve given the BOJ's slow normalization pace and growth that has largely accompanied yen weakness.

Bessent's comments may hint at the timing of intervention or other measures that could help keep USD/JPY near or below the key 160 level and prevent a return toward 164. Markets are also awaiting comments from Japanese officials at the G20.

There remains optimism that long-yen positions will eventually be rewarded as investors anticipate a faster BOJ tightening cycle and government policies that support a recovery in the undervalued currency. Options markets are less convinced, suggesting any yen recovery is more likely against the euro than the dollar if U.S. inflation remains elevated. Focus is squarely on next week's CPI report and mid-September policy meetings.

To shift momentum decisively in favor of USD/JPY bears, the pair would need to close below its 21-day moving average at 158.95 and 200-day moving average at 158.43. A break below a rising channel from the post-intervention low at 155.20 opens the door for further losses. By contrast, a close an upper Bollinger at 160.34 helps build the bull case.
Yen

(Robert Fullem is a Reuters market analyst. The views expressed are his own)