rose to 158.61 on Friday, continuing its upward move as the yen remains under pressure. Investors are taking a wait-and-see attitude ahead of the Bank of Japan's (BOJ) monetary policy decision.
The Bank of Japan recently kept rates unchanged after a hike to 0.75% in December, the highest level in nearly 30 years. Market participants are now focusing on comments from Bank of Japan Governor Kazuo Ueda for clues on the timing of the next rate hike, especially amid continued weakness in the yen.
Recent data showed a slowdown in December, but remains above the BOJ's 2% target. Additionally, fiscal risks have added pressure on the yen, as Prime Minister Sanae Takaichi prepares to dissolve parliament and call early elections, a move aimed at consolidating power and promoting fiscal expansion.
As USD/JPY approaches the psychologically significant level of 160, market expectations about possible monetary intervention are increasing, leading to greater caution among traders.
Technical analysis
On the H4 chart, USD/JPY has formed a consolidation range around 158.50. The breakout to the upside has opened the possibility of a rise to 160.00. After reaching this level, a possible drop to 158.00 may occur. The MACD indicator supports this bullish scenario, with its signal line above zero and pointing upward.
On the 1H chart, a growth wave structure is forming towards 159.30, with a possible correction to 158.70 before continuing the rise to 160.00. This scenario is confirmed by the stochastic oscillator, whose signal line is above 50 and points towards 80.
Conclusion
USD/JPY continues to rise, driven by yen weakness and market expectations of further BOJ rate hikes. As the pair approaches the 160 level, the potential for monetary intervention increases, keeping market participants cautious. Technically, the uptrend remains intact, with key levels to watch at 160.00 and 158.00.
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.
