rose to 158.93 on Monday, marking the yen's sixth consecutive session of decline. The Japanese currency is under pressure from a stronger dollar amid growing expectations that the Federal Reserve may raise interest rates this year to curb inflation.
US inflation is accelerating due to the energy shock caused by the ongoing conflict in the Middle East. At the same time, the United States and Iran have yet to reach a peace deal or move forward on reopening the Strait of Hormuz.
The USD/JPY exchange rate is once again approaching the key level of 160, where Japanese authorities intervened in the currency market to support the yen in late April.
Markets are closely monitoring the risk of new intervention by Tokyo. Further attention has been drawn to statements by Japanese officials that the authorities are willing to intervene in the currency market as many times as necessary.
Support for such expectations also comes from US Treasury Secretary Scott Bessent, who previously praised Japan's actions to stabilize the yen.
tTechnical analysis
On the H4 chart, USD/JPY is trading within a consolidation range around 158.33 and moving towards 159.30. A test of this level is likely, followed by a possible pullback to 158.30, with room for a further decline towards 157.00. The MACD indicator supports this scenario, with its signal line above zero and pointing firmly upwards, indicating continued bullish momentum.
On the H1 chart, USD/JPY has reached 159.00 and is retreating towards 158.80. A further rise towards 159.30 is possible. The stochastic oscillator confirms this scenario, with its signal line above 80 and pointing firmly towards 50, indicating that short-term bearish pressure may develop.
Conclusion
USD/JPY continues its six-day rally as the yen returns to intervention warning territory. The dollar is being boosted by expectations that the Federal Reserve may need to raise rates to combat inflation fueled by the Middle East energy shock, as negotiations between the United States and Iran remain stalled. With the pair approaching the psychologically critical level of 160, where Japanese authorities intervened in late April, markets are on high alert for possible official action. Tokyo has repeatedly expressed its willingness to intervene and US Treasury Secretary Bessent has offered support for Japan's approach. Technically, a further rise towards 159.30 seems likely before any pullback, but intervention risks may limit gains near current levels.
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.
