USD/JPY, DAX Forecast: Two trades to watch 150926

USD/JPY rises as U.S. Treasury yields rise above 5%

USD/JPY is recovering further from a seven-month low as the U.S. dollar climbs to its highest level in almost two weeks against its major peers ahead of the Federal Reserve rate decision and the BOJ meeting later this week.

The dollar is rising as the market is increasingly convinced that the Fed will hike rates on Wednesday. According to CME FedWatch, the market is pricing in a 92% probability of a 25-basis-point rate hike, taking rates to 3.75%–4%. This is up from 85% yesterday. Markets are also pricing in a 53% chance of another hike at the October meeting.

The dollar's rise has also come amid renewed gains in oil prices, which have pushed Treasury yields higher, reinforcing expectations for tighter U.S. monetary policy.

The 10-year Treasury yield has climbed above 5% for the first time since 2007 as Brent crude hits $107 a barrel.

Meanwhile, the yen has pulled back as markets look ahead to the BOJ rate decision on Friday, where the central bank is expected to raise rates by 25 basis points. The key focus will be on how strongly it signals further tightening.

The yen had gained around 4% this month on expectations that the BOJ will move faster on rates and after potential intervention from Japanese authorities.

The market will be watching for clues on whether policymakers at the BOJ are prepared to maintain a faster pace of increases after a hike on Friday.

USD/JPY forecast – technical analysis

After running into resistance around the 160 zone, USD/JPY fell aggressively, breaking below the 200 EMA before finding support at 153. From here, the price has recovered higher to 154.8 at the time of writing, testing resistance from December 2025. However, the bearish outlook remains intact.

Should buyers extend the recovery, the next level will be at 155.2, the August low. A rise above here exposes the 200 EMA at 157.5. Above here, buyers could gain traction.

On the downside, sellers will look to break below the 153 level to create a lower low, extending the bearish move to 152.10, the 2026 low.

DAX slumps as bond rout continues and oil prices surge

The DAX, along with its European peers, is falling on Tuesday, extending losses from yesterday, weighed down by rising oil prices, elevated bond yields and caution ahead of major central bank meetings this week.

Oil prices have risen sharply again on Tuesday, extending recent gains as more Houthi attacks on Saudi Arabia have spurred increased concerns over supply disruptions in the Middle East. The new Houthi focus on targets inside Saudi Arabia has opened up a new front to the Middle Eastern conflict, which could impact a further 4–5% of global supplies.

Rising oil prices are increasing inflation fears, with global bond yields rising sharply. The 10-year U.S. Treasury yield has risen to its highest level since 2007. Meanwhile, the German Bund yield has reached a 15-year high as the global bond sell-off deepens.

Rising yields can feed through to mortgages, corporate loans and other forms of credit, potentially slowing economic growth. Higher bond yields also make risky equities less attractive.

Last week, the ECB hiked interest rates by 25 basis points to 2.5% and warned that inflation could remain above its target level for an extended period of time.

Attention this week turns to three major central bank decisions: the Fed on Wednesday, followed by the Bank of England on Thursday and the Bank of Japan on Friday.

Banks are under pressure, with Deutsche Bank down 3% and Commerzbank down 1.2%.

Meanwhile, the tech sector also remains in focus after calls by tech industry leaders to slow AI development. Technology and semiconductor suppliers across Frankfurt and Amsterdam are extending recent losses after executive leaders at OpenAI and Anthropic initiated a joint call to temporarily slow down AI model development and establish global risk management standards.

DAX forecast – technical analysis

After running into resistance at 26,620 and forming a double-top formation, the DAX rebounded sharply lower, falling below its rising trend line and its 50 and 100 EMAs to 25,200 at the time of writing. This, combined with the RSI below 50, keeps sellers hopeful of further downside.

Attention is on the 25,000 round number, with a break below here opening the door to the 200 EMA at 24,800. A break below here could see sellers gain traction.

Any recovery would need to see the price retake 25,520, the January 2026 high, and 25,800, the July high. A rise above here would put the price on a more stable footing and turn attention back up to 26,620 and fresh record highs.