Fundamental Analysis

  • With rising oil prices from the Iran conflict fueling yen depreciation, USD/JPY is trading in the low 159s with 160 in sight. Daily charts show stable bullishness via moving averages and RSI, while the 1-hour chart suggests a strong buying opportunity in the high 158s. The focus is the BOJ meeting. Facing a "thorny path"—rate hikes risking recession or holding risking further yen falls—extreme caution is required for the high volatility expected from Governor Ueda's remarks.

The Path to Breaking 160

USD/JPY is currently trading in the low 159s, maintaining a strong bullish trend above the regression line. On the daily chart, the 10-day moving average is acting as a solid support level, and an RSI of 60 suggests a stable upward trajectory without signs of overheating.

With little sense of imminent currency intervention, a break above the psychological 160 barrier is a highly probable scenario depending on the outcome of this week’s Bank of Japan (BOJ) policy meeting. The BOJ faces a "thorny path" regarding the success of a potential April rate hike: skipping it invites further yen depreciation due to interest rate differentials, while proceeding with it risks a recession or a stock market crash. Amid concerns over a resurgence of inflation driven by high energy costs, maximum vigilance is required regarding Governor Ueda’s views on the pace of rate hikes and the subsequent spike in volatility.


Bullish Trend Intact: Dip-Buying Opportunity

Intraday USD/JPY is facing heavy resistance in the high 159s as verbal intervention from the Finance Minister has introduced a layer of caution. However, the technical outlook remains firmly bullish. The 10-period moving average has avoided a "dead cross" and is trending upward again, while the 52 and 90-period moving averages continue to function as reliable support.

The RSI is currently hovering near 49, a level where dip-buying typically intensifies. As long as the RSI stays above 45, there is ample room for a rebound. Strategy-wise, a correction toward the high 158s should be viewed as an ideal dip-buying opportunity, with a profit target near 159.90. Conversely, a break below 158.75 would invalidate this bullish scenario, necessitating a strict stop-loss. While high volatility is expected ahead of the BOJ meeting, the trend remains upward; the focus remains on buying the dips.