rose to 159.29 on Friday, marking one of the weakest levels since July 2024. The decline in the yen is increasing market concerns about possible intervention by authorities in the currency market.
Bank of Japan Governor Kazuo Ueda warned that a weak yen could exacerbate imported inflation amid rising oil prices. According to him, this can accelerate the Bank of Japan's transition towards normalization of monetary policy.
Ueda also noted that exchange rate fluctuations are now having a more pronounced impact on inflation than in the past, increasing their importance for policy decisions.
Oil prices rose following Iran's new Supreme Leader Mojtaba Khamenei's pledge to maintain the effective closure of the Strait of Hormuz. Tehran is stepping up attacks on oil and transportation infrastructure across the region.
There are no signs of easing tensions in the Middle East conflict. Tough rhetoric from both Tehran and Washington indicates that the confrontation involving Iran is still far from resolved as it enters its second week.
Technical analysis
On the H4 USD/JPY chart, the market is forming a consolidation range around 159.12, which currently extends to 159.60. Today a drop is expected to test 159.20 from above, followed by a possible wave of growth towards 159.88.
Technically, this scenario is confirmed by the MACD indicator, whose signal line is well above zero and pointing firmly upwards.
On the H1 chart, USD/JPY is forming a growth wave targeting 159.88, with a possible extension to 160.00. Thereafter, a downward correction towards at least 158.55 is likely.
Technically, this scenario is supported by the stochastic oscillator, whose signal line is above 80 and continues with an uptrend.
Conclusion
USD/JPY has hit multi-month highs amid a weakening yen, driven by rising oil prices and changing expectations on Bank of Japan policy. Governor Ueda's comments suggest that currency weakness may accelerate the normalization of Bank policy, although speculation about intervention continues to grow. With geopolitical tensions in the Middle East showing no signs of easing and technical indicators pointing to further upside in the near term, the pair appears poised to test the psychologically significant 160.00 level. However, verbal warnings from Japanese officials could amplify volatility.
By RoboForex Analysis Department
Disclaimer:
Any forecast contained herein is based on the author's personal opinion. This analysis cannot be considered trading advice. RoboForex assumes no responsibility for trading results based on the trading recommendations and reviews contained herein.
