By Analytical Department RoboForex
USD/JPY climbed to 158.93 on Monday, marking the yen’s sixth consecutive session of decline. The Japanese currency is under pressure from a stronger dollar amid rising expectations that the Federal Reserve may raise interest rates this year to curb inflation.
US inflation is accelerating due to the energy shock caused by the ongoing Middle East conflict. At the same time, the US and Iran have yet to reach a peace agreement or make progress on reopening the Strait of Hormuz.
The USD/JPY exchange rate is once again approaching the key level of 160, where Japanese authorities intervened in the foreign exchange market to support the yen in late April.
Markets are closely monitoring the risk of fresh intervention by Tokyo. Additional attention has been drawn to statements from Japanese officials that authorities are ready to intervene in the foreign exchange market as many times as necessary.
Support for such expectations has also come from US Treasury Secretary Scott Bessent, who previously praised Japan’s actions to stabilise the yen.
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Technical Analysis
On the H4 chart, USD/JPY is trading within a consolidation range around 158.33 and is moving higher towards 159.30. A test of this level is likely, followed by a possible pullback to 158.30, with scope for a further decline towards 157.00. The MACD indicator supports this scenario, with its signal line above zero and pointing firmly upwards, indicating continued bullish momentum.
On the H1 chart, USD/JPY has reached 159.00 and is pulling back towards 158.80. A subsequent rise towards 159.30 is possible. The Stochastic oscillator confirms this scenario, with its signal line above 80 and pointing firmly downwards towards 50, indicating that short-term downside pressure may develop.
Conclusion
USD/JPY continues its six-day rally as the yen returns to intervention-warning territory. The dollar is being bolstered by expectations that the Fed may need to raise rates to combat inflation fuelled by the Middle East energy shock, while US-Iran negotiations remain stalled. With the pair approaching the psychologically critical 160 level, where Japanese authorities intervened in late April, markets are on high alert for potential official action. Tokyo has repeatedly signalled its readiness to intervene, and US Treasury Secretary Bessent has offered support for Japan’s approach. Technically, further upside towards 159.30 appears likely before any pullback, but intervention risks may cap gains near current levels.
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
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