The USD/JPY pair is currently positioned between 156.2 and 156.4, having successfully maintained the 155.0 to 155.3 range multiple times throughout the week. The price movement continues to follow the established bullish pattern that initiated from the low in April 2025, situated around 149–150, and has been constrained by the peak of 2025, approximately 158.8. The pair encountered resistance around 152–152.3 earlier in February and has subsequently ascended to the mid-channel region, maintaining the overall upward trend, as Trump’s tariff news and fluctuating risk sentiment result in only minor pullbacks. Japan’s national core CPI has decreased to approximately 2.0% year-on-year, marking a one-year low and aligning with targets, thereby diminishing the necessity for substantial rate increases from the Bank of Japan. As inflation has dipped below the earlier 2%+ levels and wage trends remain ambiguous, market participants have shifted their expectations for BOJ tightening to a later date. Only about 15 basis points of further tightening is being anticipated by April, and the selection of board members with a reflationary inclination indicates a preference for a gradual, data-driven approach instead of a sudden shift in policy. The prevailing conditions continue to keep Japanese yields in check, hindering the JPY’s ability to achieve a sustained recovery against the dollar while global yields stay relatively high.
The message from the Federal Reserve in the US continues to indicate a preference for “later rather than sooner” regarding rate cuts. Fed funds futures indicate a more gradual and limited easing cycle than what markets anticipated at the beginning of 2026, supported by robust US activity data and persistent inflation in the service sector. The US-Japan yield spread remains broad throughout the curve. The Federal Reserve’s restrictive policy, contrasted with the Bank of Japan’s minimal movement from the zero line, creates favorable carry dynamics and rate differentials that support USD strength against JPY, even during periods when the overall Dollar Index may weaken. The Supreme Court’s dismissal of early tariff challenges, coupled with Trump’s decision to reinforce extensive 10% measures, has constrained global risk appetite, prompting a shift of some capital towards Europe, Asia, and specific emerging markets. In the past, similar waves of trade-policy uncertainty would have resulted in a significantly stronger safe-haven boost for the yen. The current response is subdued as the overarching narrative is influenced by interest-rate spreads and the policies of the Bank of Japan. Despite the intraday decline of the dollar index, JPY continues to be the weakest currency in the market, with USD appreciating approximately 0.25–0.30% against JPY, while it experiences losses against EUR, GBP, AUD, and NZD. The observed relative underperformance aligns with expectations when the market anticipates that Japan’s normalization process will be gradual and closely regulated.
On the higher-timeframe charts, USD/JPY continues to operate within an ascending channel established from the April 2025 low around 149–150, with the upper boundary positioned near 158.8 and the lower boundary currently trending upward through the high-140s. The price experienced a rebound from the 152–152.3 range earlier in 2026, aligning with the lower half of that channel, and has subsequently moved back toward the mid-line, approximately 155–156. The 2025 high near 158.8 continues to represent the outer boundary of this structure; provided the pair remains within that range, the prevailing assumption is that we are experiencing a trend pause or consolidation within an uptrend, rather than a finalized peak. A significant cluster has emerged in the range of 156.64–156.67, coinciding with the objective yearly open and approximately the 61.8% retracement of the year-to-date decline. The price is currently approaching that level from a lower position. A weekly close above 156.7 would indicate that the February pullback has likely concluded and that the market is poised to re-test the 157.7–158.1 resistance band identified from the 2025 high-week and high-close levels. If that band breaks on a weekly closing basis, the focus on potential upside shifts back to the 158.88 swing high and ultimately the 160.7–161.9 region defined by last year’s extreme highs and prior weekly closes. On the 4-hour chart, an ascending channel has formed from the low of February 2026, which stands at approximately 152.3. The mid-channel zone is presently situated around 155, a level that has transitioned from resistance to support in recent sessions. The upper boundary is positioned near 156.7, with potential movement extending to 157.2 and 158.8 should momentum increase. Provided that dips remain above approximately 154.8–155.0, the intraday framework suggests a preference for upward continuation within that channel instead of a significant pullback to the February lows.
Immediate support is established at 155.0, a level where recent intraday pullbacks have been effectively absorbed. At the 154.8 level, we find a significant point of interest, aligning with both the February opening and the low-week close from early 2026. A decisive move below this threshold could pave the way towards 153.5, which serves as a short-term consolidation base and a previous swing low. Upon closer examination, 152.7 approximately aligns with the 200-day EMA and previous weekly closing support. The overarching bullish perspective is primarily at risk if the price breaches the 151.9–152.0 range, established from the swing highs of 2022–2023 and the 38.2% retracement of the complete rise in 2025. A weekly close beneath that zone would suggest a true trend shift rather than just a typical correction. On the topside, the initial significant obstacle is the recent swing high around 156.9. A daily close above that level would validate that the recent consolidation above 155 was a temporary pause rather than a signal of a peak. The subsequent range extends from approximately 157.7 to 158.4, integrating the high-week closes from the previous year and the level at which the last upward movement encountered resistance. If USD/JPY can break through that supply zone, 158.8 re-emerges as the previous significant high, succeeded by the psychological 160.0 level and the 160.7–161.9 range of historical resistance. The upper levels are typically where intervention discussions become more pronounced, suggesting that any momentum surpassing 160 may experience volatility and be influenced by news events.
Momentum indicators suggest a consistent, rather than a rapid, progression. The MACD line on the daily chart has ascended above its signal line and entered positive territory after a mid-month decline, indicating a resurgence of upside momentum. The RSI is positioned in the mid-50s, above the midline yet still distant from overbought territory, indicating potential for additional gains without necessitating a correction. The price consistently adheres to the 200-day EMA, utilizing it as a springboard, evidenced by multiple rebounds from that breakout zone instead of prolonged trading beneath it. The short- and medium-term EMAs (20- and 50-day) are once again trending upwards, with the 20-day positioned below the 50-day but narrowing the distance, indicating a potential early-stage re-acceleration within an ongoing uptrend. The pause in metals and natural gas futures trading at a significant derivatives venue introduced a brief spike of activity in commodity markets. Natural gas has retraced from its winter rally, moving down towards the $2.8–$2.9 per MMBtu range after struggling to maintain levels near $7–$7.5. This outage has momentarily disrupted positioning within the energy and metals sectors. Despite the disruption, USD/JPY remained stable, maintaining the 155 floor without significant movement. The prevailing tranquility highlights the extent to which the pair is tethered to interest-rate expectations and BOJ communication, rather than being influenced by sporadic liquidity concerns in other asset classes. The upcoming macroeconomic assessments will be derived from the Tokyo CPI and US PPI data as we approach the end of the month.
A softer inflation report from Tokyo would bolster the view that the Bank of Japan can take a gradual approach, thereby supporting the ongoing rise in USD/JPY. On the other hand, an unexpected re-acceleration could reignite discussions about a more immediate or aggressive tightening trajectory, potentially pulling the pair down toward the 154.8 and 153.5 support levels. On the US side, a softer PPI reading would modestly alleviate skepticism regarding Fed cuts but is unlikely to change the prevailing “higher for longer” stance unless accompanied by a wider trend of weak data. Tariff headlines continue to be unpredictable: any escalation that impacts global growth expectations without altering Fed policy could potentially prolong yen weakness by strengthening the carry trade instead of enhancing traditional safe-haven demand. With the price maintaining above 155, momentum showing an upward trend, Japan’s inflation easing, and expectations for BOJ tightening diminishing, the overall evidence continues to support a positive outlook on USD/JPY. As long as the price remains above approximately 154.8, any pullbacks into the 155–155.5 range appear to present opportunities for increasing long positions rather than indicating a peak. There is a plausible upside target between 157.7 and 158.8, with potential for further movement towards 160. A breach of 154.8 would alter the short-term outlook to neutral, directing focus towards 153.5 and 152.7 as the subsequent decision points. A decisive weekly close below 151.9 would be necessary to warrant a shift in the broader bias to bearish. Until that occurs, the prevailing narrative continues to be a steady ascent, fueled by rate-differential backing and a central bank in Japan that shows no urgency to disrupt this trajectory.