USDJPY trading pair dropped significantly less than two weeks ago, yet the US dollar has been making small but consistent gains recently.
The Yen gave back some of its recent advance that was triggered by US and Japanese intervention. The pair printed above the 158.05 resistance which indicated a wider range for rebound towards the 160.85 resistance.
USD/JPY Price Forecast: Bounces up from lows with bulls aiming for 158.65
The Japanese yen softened against the US dollar, even after the Bank of Japan (BoJ) flagged rising risks of faster interest rate hikes in the last meeting. The USD/JPY pair rose to 158.23, up by nearly 2% from its lowest level this month.
The Dow Jones Index reached new record highs last week as strong company earnings and continued buying of AI-related stocks lifted market confidence. Reports that the Strait of Hormuz could reopen also helped improve sentiment and pushed oil prices lower.
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USD/JPY heads into the week with yen shorts far less stretched than before the intervention episode of late July, reducing positioning risk. The key event this week is US inflation, which could materially shift expectations for Fed hikes over the next 12 months.
The American currency is under pressure as traders reduce bets on hawkish Fed.
The U.S. dollar gets hit after a weaker-than-anticipated jobs number.
Persistent shifts in sentiment surrounding a potential US-Iran agreement continue to reinforce, rather than eliminate, geopolitical risks. As a result, both crude oil and the US Dollar Index (DXY) have regained ground, with the DXY holding above its 2026 uptrend support near 99.30 and WTI crude remaining firmly above the $70 mark.
USD/JPY stood at 158.39 on Friday, with the Japanese yen giving back some of the gains made following the joint intervention by Tokyo and Washington. The renewed weakness has once again raised expectations of possible further action by the authorities.
USD/JPY Price Forecast: Consolidates near 158.55/38.2% Fibo. before the next leg up