The USD/JPY currency pair has been fluctuating between approximately ¥155.75 and ¥156.80–156.85, following a peak at a two-week high near 156.8 before retreating toward the 155.7–156.0 range. The movement from just below ¥156.00 to ¥156.8, followed by the rejection, indicates a market that remains bullish on dollars, yet is becoming more responsive to any signals suggesting that the Bank of Japan could hasten its tightening measures. A brief decline beneath ¥156.00 movement from approximately ¥157.00 underscored the thin liquidity surrounding this level: once the spot dipped below, it appeared to be a clear breakdown before quickly rebounding above 156. The recent fakeout indicates that positioning is saturated, with volatility influenced more by policy headlines than by a systematic trend-following approach. The assertive stance from BoJ board member Hajime Takata is substantive. He contended that the price stability target is fundamentally attainable and explicitly advocated for a “gear shift” in policy, having previously expressed dissent in January to propose a 1.0% policy rate rather than maintaining it at 0.75%. The rhetoric in question is precisely what caused USD/JPY to dip briefly below ¥156, as expectations regarding rate differentials slightly favored the yen. Concurrently, political dynamics are exerting influence in an opposing direction. Tokyo has nominated two candidates to the BoJ board who are distinctly dovish, both recognized for their support of reflation and a gradual approach. Markets continue to reflect approximately 17 basis points of tightening anticipated by April, along with nearly a complete additional move expected by the end of the year. However, the recent nominations introduce a heightened risk that the committee may decelerate its pace after the forthcoming hike. The interplay of more aggressive hawkish sentiments at the margins, contrasted with a fundamentally dovish board, is precisely the reason USD/JPY finds it challenging to decline, even in the face of multiple intraday rallies in the yen.
Analyzing the chart, the key pivot point is located in the 155.75 area on the four-hour timeframe, coinciding with the 200-period simple moving average and the 23.6% Fibonacci retracement of the 152.34–156.85 movement. The convergence has already halted the initial phase of selling from the 156.80–156.85 peak. Provided that the spot remains above 155.75 on a closing basis, there is still a case to be made that this represents a pause in the larger recovery from the 152.34 low. A decisive move above 155.75, however, paves the way for a series of support levels below: the 38.2% retracement close to 155.15, the 50% level around 154.60, and the more significant 61.8% mark just above 154.00. The specified levels are in close alignment with the 154.45–155.00 range, which has served as both resistance and support since October. Should the price drop below 154.00, the optimistic outlook that emerged following the August decline towards the 140 level starts to weaken. The current momentum does not support a robust directional narrative. The four-hour RSI has returned to approximately the mid-50s after a brief encounter with overbought levels near 70, indicating a positive yet not excessive momentum. The MACD line is positioned just above the signal line and near the zero axis, indicating a slight upward pressure without a definitive trend. In other terms, USD/JPY is neither experiencing a blow-off top nor is it undergoing a clear reversal. Intraday levels hold greater significance than broader macro narratives in this context. Maintain a position above 155.75, and the price may swiftly return to the 156.80–157.00 range. If 155.75 is breached, the market is expected to test 155.15 and 154.60 with minimal discussion.
The overarching trend continues to be influenced by the 160.00 threshold. The market experienced a breach of that level on two occasions. The initial instance saw the ministry implement intervention promptly following a daily close exceeding 150.00 in 2022, establishing 145.00 and 150.00 as critical thresholds. Ultimately, the complete reversal occurred only after a softer CPI prompted a significant carry unwind, wiping out approximately half of a 21-month rally in just three harsh months and pulling USD/JPY down to the 140.00 level. When bulls finally pushed back above the 151.95 high a year later and drove the pair to 160.00, the second defense at 160.00 proved to be much more effective. Another intervention order, once more accompanied by softer inflation data, initiated a second wave of deleveraging. This move once again dismantled carry structures and propelled volatility indices to some of the highest spikes recorded. The lingering trauma remains evident in the positioning: each advance toward the high-150s is overshadowed by the recollection of official intervention and the necessity of unwinding. Bulls have consistently declined to re-test 160.00, even in the face of elevated US yields, which is not merely a coincidence.
Following the intervention-driven surge to approximately 140.00, USD/JPY has constructed a bullish staircase characterized by higher lows. However, the incline is less steep, and each advance beyond 155.00 prompts profit-taking activities. The 154.45–155.00 area that initially restricted the pair in October and transitioned into support in December has emerged as the primary pivot point of this range. The recent rebound into the range of 156.80–156.85 occurred following that range effectively capturing a pullback earlier this week. The price remains constrained within the mid-150s range and the significant 160.00 resistance level, as macro traders assess the potential impact of further Bank of Japan rate increases versus the possibility of another yield surge driven by the US.