Over the past 24 to 48 hours, the USD/JPY currency pair experienced significant volatility, breaking above its 40-year high last seen in 1986, with yesterday’s closing price at 163.121. This historic breakout was driven by a combination of factors, including increased global demand for safe-haven assets and policy pressures on the Japanese central bank. Heightened tensions between the U.S. and the Middle East pushed oil prices above $84 per barrel, strengthening the U.S. Dollar Index and consequently lifting the USD/JPY rate.

Moreover, the yen sliding past the 163 mark has sparked market speculation about potential intervention from the Japanese government and the Bank of Japan. Despite attempts by the BOJ to tighten monetary policy, the yen’s fall to a 40-year low highlights the exceptional market conditions currently weighing on the currency. For the average investor, this period of turbulence illustrates how geopolitical risks tend to drive capital flows into safe-haven currencies like the U.S. dollar, resulting in pressure on currencies like the yen and a rise in exchange rates.

Daily Chart

The daily chart shows a strong bullish trend with USDJPY steadily rising above its 50-day and 200-day moving averages. Bollinger Bands are expanding, which indicates increased volatility. The MACD has formed a bullish crossover, confirming strong upward momentum in the medium to long term. The pair’s recent break above the 39-year high at 163 further supports continued strength on the daily timeframe.

1H Chart

Over the past 3-5 days, the hourly chart shows USDJPY consolidating before a breakout above short-term moving averages. The Bollinger Bands contracted before expanding sharply, signaling increased volatility. The MACD is confirming bullish momentum, and the RSI remains below overbought levels, leaving room for further upside. The recent bullish engulfing candlestick pattern points toward continued gains over the next 24 hours.

Technical Trend:  Decisively Bullish with strong upward momentum

Technically, the 164.00 level serves as the next major resistance; a breakout above could confirm further bullish momentum. The 163.00 level, recently overtaken, has turned into strong support. The MACD bullish crossover along with expanding Bollinger Bands indicate strengthening momentum. The RSI is not yet overbought, implying more upside potential. The hourly bullish engulfing candle formation is a timely entry signal for traders. Given the safe-haven demand for the USD and Japan’s widening trade deficit, the USDJPY pair is poised to maintain its high ground.

Today’s economic calendar highlights key Japanese data already released at 01:50 GMT+1 — June trade balance, exports, and imports showing a larger trade deficit and stronger-than-expected import growth. This contributes to yen weakness and supports USDJPY upside. Other UK and US data related to energy inventories are less directly impactful for USDJPY today. Adjusted for timezones, these Japanese data have set the tone for early trading sessions.

Resistance & Support

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