Correction Near Completion, Bulls to Retest Above 160.00

Summary:

Rising oil prices are fueling imported inflation in Japan, prompting the BoJ to potentially revise inflation forecasts higher, while internal policy divergence intensifies.

BUY USDJPY

EXP

TRADING

159.160

Entry Price

161.100

157.200

159.171 +0.208 +0.13%

0.0

Pips

Flat

157.200

Exit Price

159.160

Entry Price

161.100

Fundamentals

USD/JPY has shown solid support on the 4-hour chart and edged higher during the European session, though upside momentum remains limited with strong resistance near 159.00.

Rising global oil prices have significantly increased Japan’s imported inflation pressures. Since the onset of the U.S.-Iran conflict, oil prices have surged nearly 50%. Against this backdrop, the Bank of Japan may revise its inflation outlook higher at this month’s policy meeting, potentially raising its core CPI forecast from 1.9%.

However, persistent uncertainty in the Middle East may weigh on the economic outlook, meaning that while inflation forecasts could be revised upward, growth projections may be downgraded.

Policy direction remains divided. Some officials argue against fueling rate hike expectations amid geopolitical uncertainty, while others advocate for proactive tightening to address rising inflation risks. This divergence suggests a potentially contentious policy meeting.

The BoJ will announce its rate decision and updated economic outlook on April 28, which could serve as a key catalyst for market repricing.

Correction Near Completion, Bulls to Retest Above 160.00_1

Technical Analysis

USD/JPY remains in a consolidation phase below 159.00, with a neutral short-term bias.

Key support lies around 157.50 (aligned with the 38.2% Fibonacci retracement at 157.32 from the 152.28–160.46 range). As long as this level holds, the broader bias remains bullish.

A break above 160.45 would likely open the door to a retest of the 161.94 high, extending the uptrend.

Conversely, a decisive break below 157.32 would weaken the structure, potentially leading to a deeper pullback toward 155.40 (61.8% retracement).

Trading Strategy

Direction: Buy

Entry: 159.00

Target: 161.10

Stop Loss: 157.20

Valid Until: 2026-05-14 23:55

Support: 159.30, 158.96, 157.85

Resistance: 160.02, 160.47, 160.74

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