rose to 159.73 on Monday. The price of oil has fallen for the third day in a row due to a further rise in oil prices following the failure of the United States and Iran to reach an agreement at the talks in Islamabad.
US President Donald Trump has announced plans to blockade the Strait of Hormuz and is considering resuming attacks on Iran, dramatically increasing the risks of an escalation of the global energy crisis.
The prolonged conflict is reducing the Bank of Japan's room for maneuver. There remains a division within the regulator: some members are concerned about rising inflation, while others are concerned about the risks of an economic slowdown. The Bank of Japan is scheduled to meet on April 27-28.
Economy Minister Ryosei Akazawa noted that monetary policy could be used to curb inflation by supporting a stronger yen.
The exchange rate is now approaching the key level of 160 per dollar. Previously, this area served as a trigger for monetary interventions by the Japanese authorities.
Technical analysis
On the H4 chart, USD/JPY formed a consolidation range around the 158.88 level and, with a bullish breakout, completed a wave of growth to 159.82. Today the start of a correction to the level of 158.88 is expected, followed by a rise to 160.60. Subsequently, a new bearish momentum is anticipated to 157.70, with prospects of a continued correction to 156.00. Technically, this scenario is confirmed by the MACD indicator: its signal line is below the zero level and points strictly up, reflecting the possibility of the wave continuing.
In the first half chart, the market completed a growth wave structure up to 159.82. Today the probability of the next descending wave developing to the level 158.88 (testing from above) will be considered. The scenario is confirmed by the stochastic oscillator: its signal line is above the level 80 and points strictly downwards to 20, indicating that the bearish potential persists in the short term.
Conclusion
USD/JPY continues its three-day rally as failed US-Iran talks in Islamabad triggered a new surge in oil prices, with President Trump threatening to blockade the Strait of Hormuz and resume attacks. The yen remains under pressure, while the Bank of Japan faces internal divisions over how to respond to competing inflation and growth risks.
With the pair approaching the psychologically significant level of 160, a trigger for prior intervention, markets are on high alert for possible actions by the Japanese authorities. Technical indicators suggest a possible short-term correction before a further rise, but the yen's fate ultimately depends on whether geopolitical tensions rise or fall in the coming days.
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.
