The USD/JPY pair is currently positioned at approximately 155.70, having reached an intraday peak close to 156.28, reflecting an increase of about 0.6% for the day. The price has returned above the 100-day simple moving average at approximately 155.10 and is approaching the 50-day line around 156.00, which serves as the initial resistance level. The overall scenario indicates a rebound from the recent low of 152.27 on 12 February, establishing a bullish framework as long as the market remains above the mid-155 range and maintains upward momentum. Macro backdrop: The Bank of Japan’s caution, political dynamics, and reduced expectations for interest rate hikes. The recent upward movement in USD/JPY is influenced more by developments in Tokyo than those in Washington. Reports indicate that the prime minister has urged the Bank of Japan to moderate the speed of upcoming rate hikes, reflecting evident political opposition to swift normalisation. Following the decline of core inflation in Japan to its lowest point in two years, the market’s expectation for a quarter-point hike by the BoJ at the March meeting plummeted from approximately 10% to just 3%. Anticipations for a comparable shift in April decreased from approximately 50% to 30%, despite certain surveys continuing to project policy rates approaching 1% by September.
The composition indicates that the market anticipates a return to normalcy, albeit not swiftly enough to bridge the disparity with US yields. The outcome is increased pressure on the yen, providing support for USD/JPY during pullbacks. Behind the scenes, US authorities have been conducting tests on the mechanics of dollar/yen. The New York branch of the US central bank reportedly conducted exchange-rate reviews on behalf of the Treasury, without any formal request from Japan. The reasoning is clear: should volatility surrounding Japanese elections or global disturbances begin to unsettle markets, the US aims to be prepared to respond. Insiders involved in the process have characterised this as a possible initial move towards direct yen-support operations, should Tokyo seek assistance. This results in a dual risk scenario for USD/JPY. On one side, it indicates that Washington is not concerned about the present levels and may accept a weaker yen, provided that the fluctuations are orderly. The likelihood of a coordinated operation involving dollar-selling and yen-buying increases significantly if the pair moves excessively beyond recent highs. The market currently appears to be on an upward trajectory, albeit with a cautious awareness of the potential for an abrupt reversal prompted by intervention.
On the daily chart, USD/JPY has transitioned from a corrective bias to a constructive uptrend. The price has regained the 100-day simple moving average at approximately 155.10 and is currently evaluating the 50-day simple moving average near 156.00. A clear and sustained move above that range would reveal the 157.00–157.50 area, where recent swing highs have limited every effort to push further. Momentum has shifted back towards the upside: the relative strength index has rebounded to around 53 after approaching oversold levels earlier in February, indicating that downward pressure has diminished and buyers are slowly re-establishing control instead of pursuing a late surge. Volatility is currently high yet stable, as indicated by the average true range of approximately 1.30, suggesting daily fluctuations of about ¥1.3. This scenario supports a steady trend extension instead of erratic fluctuations, as long as the support zones remain intact. Immediate support is concentrated near the moving averages. The initial level is positioned at the 100-day simple moving average around 155.10. Intraday levels near 155.00, 154.84, and 154.45 establish a concentrated short-term demand zone. A decisive break through that area would redirect attention to the 154.00 region, marking the peak of the prior consolidation, followed by a move down to 152.00–152.27, which represents the February low and the level where the last selloff ultimately lost momentum. The 152 zone has now established itself as the critical threshold for maintaining a medium-term bullish perspective: a consistent daily close beneath this level would undermine the existing uptrend and trigger a potential deeper correction.
The initial resistance is at 156.00, which aligns with the current position of the 50-day SMA. In addition, the range of 156.20–156.30 corresponds with previous intraday highs and represents the subsequent challenge. Clearing that pocket establishes a trajectory towards 157.00–157.50, the recent peak of the range. A break and weekly close above 157.50 would serve as the catalyst for a potential move toward the psychologically significant 160.00 level in the upcoming weeks. The pair is not exhibiting independent movement. The broad dollar index is currently consolidating within an ascending triangle pattern, maintaining support in the range of 97.33 to 97.46, while consistently challenging the resistance levels above. This pattern is indicative of an underlying bid poised for a catalyst to trigger a breakout. In that setup, USD/JPY continues to be the main focus as other major pairs, such as EUR/USD and GBP/USD, are positioned nearer to significant support levels and forming falling-wedge patterns that may reverse upward if the dollar is unable to break through resistance. If we rephrase this, a stagnation in the dollar will first manifest in USD/JPY declining beneath the 155 mark. Should the index ultimately break higher, the support and momentum configuration in USD/JPY suggests it will emerge as a primary beneficiary rather than a laggard.