The USD/JPY pair rose to 159.39 on Thursday, as the yen weakened amid mixed signals from Donald Trump about potentially de-escalating the conflict in the Middle East. The situation continues to support the US dollar while putting pressure on the yen.
The US currency strengthened after reports that the operation in Iran is “nearing completion” and could achieve its goals in the coming weeks. But these statements were accompanied by warnings of a possible escalation of hostilities. Meanwhile, Trump stressed that diplomatic contacts are continuing, keeping investors cautious and maintaining heightened attention to geopolitical risks.
For Japan, the situation remains delicate: the country relies heavily on oil imports from the Middle East, and fuel prices reached record levels in March, although they have since fallen slightly supported by government subsidies.
The Bank of Japan’s new board member, Toichiro Asada, has indicated his preference for a cautious, data-driven approach. He joins the council ahead of the April 27-28 meeting, when markets are currently pricing in the possibility of a rate hike of around 70%.
Technical analysis
On the 4-hour chart, the USD/JPY pair is forming a consolidation range around 159.10. The range is expected to expand to 159.50 today, followed by a decline to 157.70. A bullish breakout could lead to a correction to 160.40, after which a new downward push to 157.70 is expected, with a possible continued move towards 156.00. The MACD indicator confirms this scenario, as its signal line is below zero and pointing strongly downward, which supports the possibility of the downward trend continuing.
On the H1 frame, the market is making an advance towards 159.50 and is likely to reach the target today. After that, a downward wave to 157.70 (test from below) is possible. The Stochastic indicator confirms this structure, with its signal line above 80 and pointing strongly downward, indicating continued downside potential in the short term.
conclusion
USD/JPY remains in positive territory, with mixed signals from the US on de-escalation in the Middle East creating an uncertain backdrop that favors the dollar over the yen. While reports of progress in the Iranian operation have supported the US currency, ongoing diplomatic contacts and warnings of escalation have kept markets on edge. Japan’s sensitivity to oil price fluctuations is adding pressure on the yen, although government support provides partial relief. With a new member of the Bank of Japan’s board calling for a cautious approach and markets pricing in a 70% chance of a rate hike at the April meeting, the yen’s near-term path is likely to depend on geopolitical developments and policy signals coming out of Tokyo. Technical indicators point to a possible downward correction in the short term.
