USD/JPY Price Forecast: Climbs on safe-haven US Dollar gains

USD/JPY rises after touching a session high of 158.90.
A break above 159.00 could trigger fears of intervention near the 159–160 zone.
A drop below 157.97 exposes support at 156.45 and the 50-day SMA at 156.15.

Christian Borjon Valencia FXStreet

USD/JPY advances for the third straight day, gaining 0.07% on Monday as the Greenback remains underpinned by its safe-haven appeal, and expectations for a less dovish Federal Reserve (Fed). The pair trades at 158.02 at the time of writing.

USD/JPY Price Forecast: Technical outlook

The US Dollar remains underpinned despite the high risks of intervention by Japanese authorities.

USD/JPY rose to a daily high of 158.90, ahead of 159.00, which could have raised the alarm amongst Japanese authorities. However, traders booked profits, as the pair retreated toward the current exchange rate.

Momentum is tilted to the upside as depicted by the Relative Strength Index (RSI), which is getting close to overbought territory.

That said, the USD/JPY first resistance is 159.00. A breach of the latter increases the chances of a reversal as the exchange rate would be at the intervention zone, seen at around the 159.00-160.00 area.

Conversely, if USD/JPY tumbles below the March 3 high at 157.97, which turned support, the next stop would be the March 5 swing low of 156.45. On further weakness, the next stop would be the 50-day Simple Moving Average (SMA) at 156.15 ahead of the confluence of the 20 and 100-day SMAs at 155.49/51.

USD/JPY Price Chart – Daily

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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