USD/JPY is currently at 157.68 on Thursday, approaching the significant 158-160 resistance zone, which is the most critical technical barrier the pair has encountered in decades — a resistance cluster with price memory dating back to 1990. The pair experienced a decline during Thursday’s session before making a recovery, illustrating the ongoing tension between two opposing forces: robust U.S. economic data that should be pushing USD/JPY higher, and a shock from the Hormuz-Strait disruption that is consistently bolstering the yen due to Japan’s reliance on energy imports, where every barrel of Brent priced at $84 represents a negative impact on Tokyo’s current account. The bearish engulfing candle that appeared Wednesday at multi-week highs represents the most technically important single-candle occurrence in the USD/JPY chart since the uptrend commenced in mid-February. The pair hit 157.85 — merely three pips shy of the November 2025 swing high at 157.88, which has acted as both resistance and support since — before reversing entirely, engulfing the body of the previous session with a decisive close. The level at 157.88 is a significant point of resistance. The price has undergone significant technical analysis on both sides of that level over several months, and Wednesday’s inability to achieve a clear break above it — coupled with a complete bearish engulfing reversal during the same session — represents the precise technical pattern that typically signals directional breakdowns in the pair. The occurrence following a prolonged increase from the lows in February enhances its credibility, rather than diminishing it.
The USD/JPY has experienced an upward trajectory since February 11, supported by a consistently rising 100-hour moving average that has served as a reliable support level during each pullback in the five-week uptrend. The late-week lows of the previous session attracted buyers right at this moving average, initiating a rebound to 157.41 — which subsequently halted just beneath the main upper resistance area between 157.65 and 157.73. The sequence observed — solid support at the 100-hour moving average, a rebound to 157.41, a setback just under 157.65-157.73, and a failure to breach 157.88 in the following attempt — outlines the technical story of a pair that is diminishing in upward momentum faced with a robust resistance that has consistently withstood every significant challenge. The 100-hour moving average is currently positioned at 156.87. This level serves as the indicator for the short-term directional trend. A continued close above 156.87 preserves the February uptrend and supports a move towards another effort at 157.65-157.73, followed by the 157.88 neckline. A confirmed break below 156.87 — especially with increased volume — indicates that sellers have effectively protected the 157.88-158 range and that the February uptrend is at risk. The next downside target in that scenario is the 200-hour moving average at 156.17. Below 156.17, the February 25 high of 156.83 serves as an interim reference, while the uptrend line from February 17 and the 50-day moving average around 155.64-155.69 create a broader support zone that would likely contain a more aggressive correction.
The RSI (14) has broken its modest uptrend and currently rests just above the neutral 50 level, failing to provide the clear bearish momentum signal needed to validate the Wednesday engulfing as a strong reversal indication. The MACD has moved back into positive territory after crossing the signal line from below, indicating that the intermediate momentum framework is showing mild bullishness, despite the daily candle structure signaling caution. The discrepancy between the price action signal and the momentum indicators underscores the necessity for follow-through confirmation in the bearish thesis, rather than a hasty entry based solely on the engulfing pattern. The USD/JPY’s approach to the 158-160 resistance zone represents an atypical technical scenario — it engages with a historical price context that extends beyond contemporary quantitative finance methodologies. The 160-yen level serves as a significant barrier that has been in place since 1990, indicating that a confirmed daily close above 160 would signify a breakout from a resistance structure that has persisted for 35 years. The importance of that level generates a remarkable focus within the market: every institutional desk holding a USD/JPY position is closely monitoring the 158-160 range. The risk of intervention from the Ministry of Finance adds to the technical resistance alongside political risk, while the significant psychological impact of historical references leads to option barriers and systematic selling that mechanical buyers need to manage before any clear breakout can take place.
The 50-day EMA stands at 155.69, while the 200-day EMA is positioned at 152.84, establishing the wider support framework beneath the existing price levels. A close of USD/JPY below the 50-day at 155.69 would mark the first significant breach of the uptrend since mid-February, potentially setting the 154-yen level as the next target. The daily chart reflecting the movement from 142 to 157.68 illustrates a distinct uptrend characterized by higher lows and higher highs — a formation that stays technically sound as long as the pair maintains its position above the 50-day EMA. The 156-yen level serves as the initial psychological support beneath current prices, succeeded by the 50-day at 155.69, and then the crucial 154 level that — if breached — would put the entire mid-February recovery narrative at risk. The key development in USD/JPY price action over the past week is not the collapse of the Federal Reserve rate cut probability or the ISM services beat — it is the change in the pair’s main correlation from rate differentials to the energy complex. The relationship between USD/JPY and short-term U.S. rate expectations remains, but it has taken a backseat to the connection between USD/JPY and the prices of crude oil and natural gas. The shift in regime is entirely rational considering Japan’s structural status as an energy importer, lacking any significant domestic fossil fuel production. Japan relies on imports for nearly all of its oil and natural gas needs. As Brent rises from $72.50 to $84 — a 16% increase in just six days due to Hormuz disruptions, Qatar LNG force majeure, and Iranian tanker strikes — the current account calculations for Japan worsen in real time. Each $10 increase in oil prices per barrel leads to a notable decline in Japan’s trade balance, resulting in a negative impact on the yen as importers are required to exchange yen for dollar-denominated oil. This situation also presents an inflation challenge that the Bank of Japan must manage while contending with a still-weak domestic growth environment.
The energy shock stemming from the Iran conflict is consistently detrimental to the yen via the import cost channel, while at the same time fostering global risk aversion that could theoretically support the yen through safe-haven flows. The two effects are counteracting one another, resulting in USD/JPY fluctuating instead of moving decisively in one direction. The speculation surrounding a ceasefire in Iran on March 4, which involved Iranian intelligence agents allegedly reaching out to U.S. officials through intermediaries—a claim subsequently denied by Tehran—triggered a notable rally in risk assets. This was accompanied by a decline in crude and gas prices, which corresponded with a weakening of the yen and a strengthening of the USD/JPY exchange rate. Following the denial, energy prices rebounded while USD/JPY experienced a pullback. The current trading landscape for the pair is characterized by an emphasis on energy, followed by interest rates, with geopolitical developments acting as the driving forces that influence the energy sector, subsequently impacting USD/JPY. Any role in the pair necessitates a concurrent perspective on Brent and TTF, rather than solely focusing on the Fed and the BOJ.