USD/JPY holds at highs: Pressure lingers on Yen

USD/JPY ended Tuesday at 162.27, with the Japanese yen remaining near 40-year lows. Pressure on the currency persists, as Japanese authorities have yet to carry out fresh interventions to support the exchange rate.

The yen fell sharply on Monday following reports from Reuters that Japanese authorities do not plan to change the asset structure of the state pension fund in the near future, reducing expectations of additional support for the domestic financial market.

Later, Finance Minister Satsuki Katayama stated that the country's largest pension fund could adjust its investment structure if necessary. She also proposed including government bonds in a tax-free investment programme for private investors to boost interest in domestic assets.

Additional pressure on the yen came from a strengthening US dollar and a fresh surge in oil prices. The catalyst was US President Donald Trump's decision to restore the blockade of Iranian ships passing through the Strait of Hormuz, along with his call for countries that benefit from the security of this strategic route to compensate Washington for its protection costs.

Technical analysis

On the H4 USD/JPY chart, the market is forming a consolidation range around the 162.22 level, currently extending up to 162.46. A decline leg to the 162.22 level (testing from above) is expected today, followed by further growth to 163.30, with the prospect of the trend continuing to 164.15. Technically, this scenario is confirmed by the MACD indicator, whose signal line is above the zero level and pointing strictly upwards.

On the H1 chart, USD/JPY has completed a downward wave pattern to the 162.22 level. A wave extension to 162.00 cannot be ruled out. Thereafter, the start of a growth wave to at least 163.30 is expected. A breakout above this level would open potential for a continuation of the growth wave to 164.15. Technically, this scenario is confirmed by the Stochastic oscillator, whose signal line is below the 50 level and pointing strictly downwards to 20, indicating short-term downward pressure before a potential reversal.

Conclusion

USD/JPY remains elevated, with the yen stuck near 40-year lows as markets await concrete action from Japanese authorities. The currency weakened further following reports that the state pension fund will not change its asset structure imminently, although Finance Minister Katayama later left the door open for adjustments. Meanwhile, renewed US naval blockades in the Strait of Hormuz and Trump's demand for compensation from allies have pushed oil prices higher, adding to dollar strength. Technical indicators suggest the pair may see a modest pullback before resuming its upward trajectory towards 163.30 and possibly 164.15, with intervention risks remaining the key wildcard for yen bulls.