Over the past 24-48 hours, USD/JPY has shown a steady upward drift, moving from yesterday’s closing price around 159.52 to trade above 159.70 and briefly touching highs near 159.85, approaching the psychologically important level of 160.00. However, amidst recent warnings from the Japanese government regarding the yen’s sharp decline, market sentiment remains cautiously optimistic.

The renewed tensions in the Middle East, especially uncertainty surrounding the Iran conflict and the prospects for ceasefire, have elevated global risk aversion, which benefits the US dollar and has kept the dollar index (DXY) strong. This dollar strength has weighed on the yen, compounded further by crude oil price shocks, creating additional pressure on the yen and pushing USD/JPY closer to the 160 handle in the short term.

For the average investor, this scenario resembles a flight to safety amid high market uncertainty, with capital naturally flowing into the dollar as a safe haven, while the yen suffers due to Japan’s economic sensitivity to Middle East risks and energy price volatility. Overall, investors should closely monitor Middle East developments and oil price movements, as they will directly influence the USD/JPY pair’s near-term volatility and direction.

Daily Chart

On the daily chart, USDJPY exhibits a strong bullish trend, steadily rising since the beginning of the year and currently nearing the 160 psychological level. The 50-day moving average (~156.5) and 200-day moving average (~152) are in a bullish alignment with price above both, confirming a robust medium to long-term uptrend. Bollinger Bands are widening, indicating increased volatility, though the price has yet to break above the upper band to signal an overbought condition. MACD remains positive with momentum still in place, but volume should be monitored for sustained support.

1H Chart

The hourly chart over the past 3-5 days shows USDJPY moving within an ascending channel. Short-term moving averages recently formed a bullish crossover. The price repeatedly tested resistance near 159.8 but failed to decisively break through, retreating to support around 159.4. Bollinger Bands oscillate around the midline reflecting short-term volatility. MACD stays above zero but shows waning momentum suggesting a potential short-term pullback. A minor head and shoulders pattern is emerging, cautioning traders of possible near-term consolidation if resistance holds.

Technical Trend:  Trend Direction: Clearly bullish trend with cautious short-term sideways oscillation.

Technically, USDJPY maintains a strong bullish posture on the daily timeframe supported by upward moving averages and positive MACD momentum. However, the emerging head and shoulders pattern on the hourly chart suggests a possible short-term correction. The pivotal element to watch is whether price can break decisively above the 160 round number to confirm continued upside or fail and trigger retracement. Volume and MACD signals intraday will provide early clues on momentum shifts and trading opportunities.

There are no significant economic events directly impacting USD or JPY scheduled for today. The focus remains on speeches by several US Federal Reserve officials and oil rig count data, which may indirectly affect market sentiment. The European Union’s Eurogroup meeting has limited relevance to USDJPY. Thus, USDJPY price action will primarily respond to geopolitical developments and market sentiment rather than scheduled data today, with possible impact from US consumer sentiment data released later in the session.

Resistance & Support

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