fell sharply following the intervention of the Japanese authorities, pushing the pair down from the 160.00 area. Although selling pressure has begun to stabilize, the broader structure of the market has not yet completely changed.
From a fundamental perspective, the interest rate differential between Japan and the United States remains the key factor behind the pair. Higher US yields continue to attract capital flows, while the Bank of Japan maintains a relatively accommodative stance. This keeps the yen under pressure in the medium term.
The recent intervention is likely to have only a temporary impact unless it is backed by more forceful policy changes, such as a more aggressive turn by the Bank of Japan or a slowdown in the U.S. economy that could push the Federal Reserve toward a more dovish stance.
Additionally, rising oil prices may contribute to inflationary pressures in Japan. However, with the current government remaining focused on economic growth, aggressive rate hikes remain unlikely in the near term.
Technical analysis:
In the 4H timeframe, USD/JPY is currently going through a corrective phase following the sharp decline from recent highs. The price has broken its previous structure and is now approaching a key support zone around 154.45-155.00.
This area is critical as it can act as a reaction zone for buyers, supported by a trend line formed from previous price movements. As long as the pair remains above this zone, the possibility of a bounce will persist.
However, if the selling pressure continues and support is broken, the decline may extend further towards the 151.95-152.50 area, which represents a stronger support zone.
On the upside, a break above the 156.70-157.90 resistance zone would be necessary to indicate that bullish momentum is returning.
Conclusion
USD/JPY is currently in a corrective phase following intervention-driven selling, but the broader trend remains intact. As long as there are no significant changes in monetary policy, the interest rate gap is likely to continue supporting the US dollar in the medium term.
In the short term, price action will depend on how the pair reacts around the 154.45-155.00 support zone. A hold above this level could trigger a rebound, while a breakout could trigger a deeper decline.
Overall, the current decline appears to be a correction within a broader trend, with future direction largely dependent on policy developments and potential further intervention by Japanese authorities.
