fell slightly on Tuesday, touching 159.26.
The Bank of Japan left its interest rate unchanged at 0.75% per year, as widely expected. At the same time, it raised its 2026 inflation forecast to 2.8%, up from 1.9% previously, while lowering its GDP growth outlook to 0.5% from 1.0%. These revisions reflect the likely economic consequences of the current conflict in the Middle East.
Investors are also closely monitoring developments surrounding Iran. Tehran has sent a new proposal to the United States, but disagreements over the nuclear program remain a key obstacle.
An additional factor is the position of the Japanese authorities. Finance Minister Satsuki Katayama reiterated her willingness to intervene in the foreign exchange market if necessary and emphasized greater coordination with the United States on exchange policy.
Technical analysis
On the H4 chart, USD/JPY is trading within a consolidation range around the 159.36 level and moving lower towards 158.90. A test of this level is likely, followed by a possible bounce towards 159.88 and potentially 160.77. Technically, this scenario is confirmed by the MACD indicator, with its signal line above zero but pointing firmly downward, indicating the possibility of further short-term declines before a recovery.
On the H1 chart, USD/JPY is developing a downward move towards 158.90. A bounce towards 159.88 may follow, with a possible extension to 160.77. The scenario is confirmed by the stochastic oscillator, with its signal line below 50 and pointing firmly towards 20, indicating that short-term bearish pressure persists.
Conclusion
The yen has found some support following the Bank of Japan's policy decision, despite the Bank of Japan leaving rates unchanged. The key takeaway for markets was the upward revision of inflation forecasts (from 1.9% to 2.8%) driven by the Middle East conflict, along with a downgrade in GDP growth expectations.
This suggests the Bank of Japan is acknowledging persistent price pressures while balancing weaker economic activity. Additionally, Finance Minister Katayama's renewed commitment to monetary intervention and policy coordination between the United States and Japan has helped support the yen.
Technically, USD/JPY may see a further short-term decline towards 158.90 before a possible rebound. The general direction will depend on geopolitical developments and any other signals from Japanese authorities regarding intervention.
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.
