USD/JPY has reverted to a straight rates play between the US and Japan, with developments in the Gulf the key underlying driver of both outlooks. Extended uncertainty surrounding the Iran war now has both the Federal Reserve and Bank of Japan expected to keep policy settings on hold in the near term, a sharp shift from the pre-conflict view that the Fed would cut at least two times this year while the BOJ hiked twice.
Next week is Central Bank week as we hear from the Fed, ECB, BoE, BoJ and Bank of Canada. No actual moves are expected but what is being watched for is the hinting of future moves, particularly around the BoJ and ECB.
USD/JPY continues to consolidate just below a key resistance zone after a strong advance, with price action reflecting a period of compression near recent highs. The pause in momentum suggests a potential buildup for a larger move, with the broader uptrend still intact for now.
The pair managed again to hit another correction while still facing the support zone of 157.25-65, which could hold prices inside this trading zone toward resistances 160.20 or 161.95. Above 161.95 the market could enter a new uptrend wave with first target toward 163.80.
USDJPY keeps firm tone and trading near psychological 160 barrier, with near term action being slower on Friday, in comparison to strong gains in previous few sessions.
USD/JPY Price Forecast: Bulls await range breakout above 160.00 amid intervention fears
Looking at the 4-hour chart, the pair settled above the 159.00 level, the 100 simple moving average (red, 4-hour), and the 200 simple moving average (green, 4-hour). Besides, the pair cleared a key bearish trend line with resistance at 159.35.
So far – the Fibonacci support at 97.94 has held the lows in the USD. Earlier in the month I highlighted this zone as a spot of support potential for the Greenback as this was the resistance side of the ascending triangle that had formed into the March open.
With just a few days left before the end of the trading week, USD/JPY price action continues to show no meaningful directional changes in the short term. Over the past two sessions, the pair has posted an average move of around 0.1%, suggesting that price action has not been able to establish a clear trend.
The Currency pair is known for its erratic price action, highly affected by movements in rates, global trade, and inflation, as well as regional and geopolitical developments, all of which have been severely affected since the beginning of the US-Iran conflict.
USD/JPY Technical Analysis: The USD/JPY pair stalls after experiencing massive geopolitical swings, consolidating as market participants weigh energy-driven inflation against a hesitant Bank of Japan. As traders await tonight's CPI data and a pivotal weekend of diplomatic negotiations, a clear directional breakout for the Yen hinges on a resolution to the Middle East conflict.
As much noise as we have in the interest rate markets, it isn't a surprise that with rising rates, we have a rising dollar as well.