Rate Hike Fears Explode! Will USDJPY Hold Firm Above 160?

Summary:

Given concerns that Japanese authorities may intervene, the potential upside for the U.S.-Japan exchange rate may be limited.

BUY USDJPY

Close Time

CLOSED

160.224

Entry Price

163.000

157.000

163.763 +0.030 +0.02%

205.5

Pips

Profit

157.000

162.279

Exit Price

160.224

Entry Price

163.000

Fundamentals

A series of economic data recently released in Tokyo and Washington indicates that the labor markets in both Japan and the United States—the world’s two largest economies—remain resilient, while inflationary pressures have not yet fully subsided. Against this backdrop, the policy focus of both central banks is shifting further toward curbing inflation, and market expectations that the Bank of Japan and the Federal Reserve will continue to tighten monetary policy have risen significantly. At the same time, consumer inflation in Japan has moderated. The inflation rate used to calculate real wages fell to 1.5% in April, down from 1.6% in March, and remained below the Bank of Japan’s 2% target for the fourth consecutive month. Government subsidies have partially offset price pressures stemming from the yen’s depreciation—which has driven up import costs—and rising oil prices caused by the situation in the Middle East, leading to a slowdown in consumer price growth.

The U.S. economy has also demonstrated greater-than-expected resilience. Data from the U.S. Department of Labor showed that nonfarm payrolls increased by 172,000 in May, far exceeding the market’s previous estimate of 85,000. April’s job gains were revised upward to 179,000, and March’s figure was also revised upward to 214,000. Over the past three months, the U.S. has added an average of 188,000 jobs per month, nearly triple the level seen during the same period in 2025. The unemployment rate remained at 4.3% for the third consecutive month, indicating that the labor market remains stable overall.

Technical Analysis

On the daily chart, the USD/JPY pair shows an upward-sloping Bollinger Band and diverging moving averages, indicating an overall upward trend. There is a high probability that the price will rise to near the previous high of 160.8. The RSI stands at 63, suggesting that market sentiment is predominantly bullish. On the 4-hour chart, the Bollinger Bands are narrowing, the moving averages are flattening, and the MACD fast and slow lines are trading above the 0 line, indicating that the bullish trend remains intact. The RSI stands at 64, indicating an optimistic market sentiment. The recommended strategy is to buy on dips.

Rate Hike Fears Explode! Will USDJPY Hold Firm Above 160?_1

Rate Hike Fears Explode! Will USDJPY Hold Firm Above 160?_2

Trading Recommendation

Trading Direction: Buy

Entry Price: 160

Target Price: 163

Stop-Loss Price: 157

Support Levels: 158, 157, 155

Resistance Levels: 161, 162, 163

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Rate Hike Fears Explode! Will USDJPY Hold Firm Above 160?

Risk Disclosure