USD/JPY retreats as Yen firms ahead of BoJ decision

The USD/JPY pair is trading near the 159.30 price zone as markets are increasingly positioning for a hawkish hold from the BoJ, with policymakers expected to keep the benchmark rate unchanged at 0.75% while signaling a willingness to tighten further. This shift in expectations is helping the Yen recover slightly, even as broader policy divergence with the Federal Reserve (Fed) continues to favor the US Dollar (USD).

The ongoing Middle East conflict continues to underpin safe-haven demand for the Greenback, with uncertainty showing little sign of easing as the war approaches its two-month mark. Elevated energy prices and geopolitical risks are keeping global markets cautious, supporting the USD on dips.

Short-term technical analysis:

On the four-hour chart, USD/JPY trades at 159.29. The pair is hovering just above a dense support band between roughly 159.27 and the 100-period Simple Moving Average (SMA) at 159.21, but the pair remains capped by nearby resistance at 159.30 and the 20-period SMA at 159.47. Taken together, the price dynamic hints at a consolidative, slightly topside-capped tone. The Relative Strength Index (14) around 47 suggests momentum has eased back toward neutral, aligning with a pause rather than a clear directional break for now.

On the downside, immediate support emerges at 159.27, followed by the 159.20 horizontal level clustered around the 100-period SMA at 159.21, while a clearer bearish extension would only be suggested on a break under the lower support area near 159.10.

(The technical analysis of this story was written with the help of an AI tool.)