Over the past 24 to 48 hours, USD/JPY has maintained a robust upward momentum, bouncing from yesterday’s closing price of 158.813 to test levels near 159.00. The driving force behind this movement is the escalating geopolitical tensions, especially the intensifying conflict involving Iran in the Middle East, which boosted safe-haven demand and lifted the US Dollar Index (DXY) by over 0.4%.

Further supporting the dollar’s strength are rising US bond yields and weakness in stock markets, which have pressured the Japanese yen. Although there has been some indecision around the 159 level in the short term, bullish sentiment remains dominant. Markets are closely watching the upcoming joint meetings of the Federal Reserve and the Bank of Japan, given the looming risk of FX intervention by Japan’s Ministry of Finance.

For the average investor, this means the USD/JPY exchange rate is likely to continue experiencing volatility driven by geopolitical risk and diverging global monetary policies. In other words, investors with exposure to the dollar or related positions should keep a close eye on Middle East developments and central bank decisions, as these factors will directly influence the currency pair’s trajectory going forward.

Daily Chart

The daily chart shows a steady uptrend for USDJPY since the beginning of the year, with recent prices holding above the crucial 20-day simple moving average, signaling sustained short-term bullish momentum. Bollinger Bands are expanding, indicating increased volatility, with prices often oscillating above the middle band. The MACD is approaching a bullish crossover, hinting at strengthening medium-term momentum. However, resistance near the yearly high of 162 remains significant. Overall, the daily setup suggests a bullish bias but watch for reactions near the 159-160 resistance zone.

1H Chart

On the hourly chart, USDJPY has found strong support around 158.10 over the past 3 to 5 days and rebounded upward. The 20- and 50-hour moving averages are crisscrossing, reflecting a short-term consolidation phase. The MACD remains positive but momentum is waning, indicating limited bullish strength. Notably, a bullish engulfing candlestick pattern recently formed, pointing towards short-term upside potential, although the threat of intervention from the Bank of Japan could add volatility.

Technical Trend:  The current trend is cautiously bullish, with short-term consolidation embedded within an overall upward bias.

Technically, USDJPY is supported by the 20-day moving average on the daily chart, creating a foundation for the ongoing bullish push. The MACD nearing a positive crossover and widening Bollinger Bands indicate increased momentum and volatility. The recent bullish engulfing pattern on the hourly chart supports immediate upside, though strong resistance exists at the psychological 159 and 160 levels. Market hesitation and the looming risk of Japanese intervention necessitate cautious entries. Overall, the pair is in a tactical tug-of-war near critical levels, making breakout or reversal signals key for short-term traders.

Today’s GMT+1 economic calendar highlights the release of the Bank of Japan Minutes at 00:50, which is the key event directly impacting USDJPY. The minutes will shed light on the BoJ’s policy stance, critical amid the current exchange rate volatility and intervention risks. Other economic data such as UK and Swedish CPI and US trade statistics are less directly relevant to USDJPY today. Traders should watch the BoJ minutes closely for any signals that may affect the yen’s outlook and market sentiment.

Resistance & Support

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