Bullish Momentum Poised for Resurgence if Structural Support Holds

Forex

Economic

Summary:

A decisive close above this dynamic resistance would likely serve as the technical trigger for an accelerated bullish expansion toward the 160-handle.

BUY USDJPY

EXP

TRADING

158.823

Entry Price

160.400

157.870

159.167 +0.204 +0.13%

0.0

Pips

Flat

157.870

Exit Price

158.823

Entry Price

160.400

Institutional expectations regarding a potential monetary tightening by the Bank of Japan (BoJ) in April have continued to gain significant traction. A former executive director of the institution recently cautioned that should the central bank fail to take decisive action during its upcoming assembly on April 27–28, it risks falling behind the inflationary curve. This sense of urgency is compounded by the fact that the Japanese economy remains uniquely vulnerable to intensifying tensions in the Middle East.

Given Japan's near-total systemic reliance on crude oil imports, the effective disruption of maritime transit through the Strait of Hormuz since late February has dramatically inflated energy expenditures. This development adds a layer of complexity to the BoJ’s delicate balancing act: curbing domestic inflation while simultaneously sustaining fragile economic growth. Within this high-stakes environment, Economy Minister Ryosei Akazawa intensified the policy debate last week by suggesting that monetary policy should be leveraged as a strategic instrument to contain inflation through the strengthening of the Japanese Yen (JPY).

Parallel to these regional pressures, reports indicate that the United States and Iran are actively positioning themselves to resume high-stakes diplomatic negotiations, a development that could materialize as early as this week. A senior U.S. official characterized the current climate as highly dynamic, noting that while the essential "ingredients for a deal" are present, a definitive accord remains elusive. The eventual resolution of this conflict is of paramount importance to global markets, primarily due to its systemic influence on energy expenditures and the resulting shifts in inflationary expectations.

From the perspective of U.S. monetary policy, Chicago Fed President Austan Goolsbee issued a stark warning, suggesting that the Federal Reserve might be compelled to delay interest rate cuts until 2027. He observed that a protracted period of elevated oil prices—driven by the ongoing hostilities involving Iran—could significantly obstruct inflation's descent toward the mandated 2% target. In contrast, Governor Stephen Miran offered a more optimistic trajectory, suggesting that inflation could align with the target within a year and expressing skepticism that energy prices will remain structurally elevated.

Adding to this cautious narrative, San Francisco Fed President Mary Daly observed that the latest U.S. inflation report provided few surprises for the Governing Council. Daly indicated that the probability of maintaining interest rates at their current restrictive levels presently exceeds the likelihood of an additional hike. However, she underscored a strictly data-dependent contingency: should inflation remain entrenched above the 2% target for a more protracted period than anticipated, the Federal Reserve will maintain its restrictive policy stance until price stability is conclusively achieved.

Regarding recent economic data, the U.S. Producer Price Index (PPI) for March arrived softer than anticipated, printing at 4% against a forecast of 4.6%. Meanwhile, the Core PPI—which excludes volatile food and energy components—maintained a year-over-year pace of 3.8%, remaining unchanged from February. Conversely, the labor market continues to exhibit remarkable resilience, with the ADP Employment Change four-week average ascending to 39.25K, up from 26K in the preceding week. Bullish Momentum Poised for Resurgence if Structural Support Holds_1

Bullish Momentum Poised for Resurgence if Structural Support Holds_1

Technical Analysis

From a technical perspective, USD/JPY has begun to exhibit signs of bullish resilience as price action approaches a high-confluence support zone. Specifically, the pair is testing the 200-period Moving Average (MA) situated at 158.73, which is anchored just above a critical local support level at 158.66. Should this structural floor be successfully defended by the bulls, we anticipate a resumption of the broader bullish impulse, with a primary objective of revisiting the 160.46 peak established on March 27.

It is worth noting that the 100-period MA currently tracks just above current price levels at 159.03. A decisive close above this dynamic resistance would likely serve as the technical trigger for an accelerated bullish expansion toward the 160-handle.

Our analysis of momentum oscillators provides further validation for a potential upside pivot. The Relative Strength Index (RSI) recently descended to the 37 level, nearing oversold territory and suggesting that the recent corrective phase is approaching exhaustion. Simultaneously, the MACD continues to print a bearish histogram; however, the bars are visibly losing depth, signaling that the downward momentum is dissipating.

A transition into a positive histogram, coupled with the defense of the 158.66 support, would confirm a bullish reversal. Given that the signal lines are currently oscillating just beneath the neutral threshold, a sharp rejection from current levels would likely propel the pair back into a dominant bullish configuration.

Trading Recommendations

Trading direction: Buy

Entry price: 158.83

Target price: 160.40

Stop loss: 157.87

Validity: Apr 24, 2026 15:00:00

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Bullish Momentum Poised for Resurgence if Structural Support Holds

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