The USD/JPY experienced an increase, reaching 159.73 on Monday. The Japanese yen has depreciated for a third consecutive day, driven by a renewed increase in oil prices after the United States and Iran were unable to reach an agreement during discussions in Islamabad. The announcement by US President Donald Trump regarding plans to block the Strait of Hormuz and the potential resumption of attacks on Iran significantly heightens the risks associated with a global energy crisis. The extended conflict is constraining the Bank of Japan’s flexibility in its policy decisions. A division persists among the regulatory body: certain members express apprehension regarding escalating inflation, whereas others are focused on the potential hazards associated with an economic downturn. The Bank of Japan is set to convene on April 27-28.
Economy Minister Ryosei Akazawa emphasized that monetary policy could serve as a tool to mitigate inflation by fostering a stronger yen. The exchange rate is currently nearing the significant threshold of 160 per dollar. This region has historically acted as a catalyst for currency interventions by the Japanese authorities. On the H4 chart, USD/JPY established a consolidation range near the 158.88 level and, following an upside breakout, achieved a growth wave to 159.82. Today, a correction to the 158.88 level is anticipated, subsequently leading to an increase to 160.60. Following this, a new downward movement to 157.70 is expected, with the possibility of an ongoing correction to 156.00. This scenario is substantiated by the MACD indicator, with its signal line positioned below the zero level and directed firmly upwards, indicating the possibility for the wave to persist.
On the H1 chart, the market has finalized a growth wave structure reaching 159.82. Today, we will assess the likelihood of the forthcoming downward wave reaching the 158.88 level, with a focus on testing from above. The situation is validated by the Stochastic oscillator—its signal line is positioned above the 80 level and is directed firmly downward toward 20, suggesting that there is still downside potential in the short term. The USD/JPY maintains its upward trajectory for the third consecutive day, following unsuccessful US-Iran negotiations in Islamabad that have led to a renewed increase in oil prices. This development comes alongside President Trump’s threats to obstruct the Strait of Hormuz and reinstate military actions.
The yen continues to experience downward pressure, as the Bank of Japan grapples with internal disagreements regarding its response to the conflicting risks of inflation and growth. As the pair nears the psychologically important 160 level, which has previously prompted intervention, markets remain vigilant for possible measures from Japanese authorities. Technical indicators imply a potential short-term correction prior to additional gains; however, the future of the yen is fundamentally dependent on the trajectory of geopolitical tensions in the immediate future.