USD/JPY Price Forecast: Approaches 160.00 as US Dollar gains amid Middle East war
- USD/JPY rises to near 159.60 as the US Dollar outperforms its peers.
- Middle East conflicts have improved the safe-haven demand of the US Dollar.
- Traders see the Fed unlikely to cut interest rates this year.
The USD/JPY pair trades 0.22% higher to near 159.60 during the European trading session on Monday. The pair gains as the US Dollar (USD) trades firmly amid firm demand for safe-haven assets, in the wake of the war in the Middle East.
During the press time, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades 0.33% higher to near 99.85.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.39% | 0.36% | 0.18% | 0.03% | 0.90% | 0.70% | 0.29% | |
| EUR | -0.39% | -0.04% | -0.20% | -0.34% | 0.63% | 0.30% | -0.11% | |
| GBP | -0.36% | 0.04% | -0.21% | -0.33% | 0.67% | 0.34% | -0.08% | |
| JPY | -0.18% | 0.20% | 0.21% | -0.13% | 0.73% | 0.46% | 0.11% | |
| CAD | -0.03% | 0.34% | 0.33% | 0.13% | 0.85% | 0.54% | 0.22% | |
| AUD | -0.90% | -0.63% | -0.67% | -0.73% | -0.85% | -0.32% | -0.61% | |
| NZD | -0.70% | -0.30% | -0.34% | -0.46% | -0.54% | 0.32% | -0.38% | |
| CHF | -0.29% | 0.11% | 0.08% | -0.11% | -0.22% | 0.61% | 0.38% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
Middle East conflicts have escalated as Iran vows to retaliate against the United States (US) and Israel if they attack Tehran’s power plants. Over the weekend, US President Donald Trump threatened to obliterate Tehran’s power plants if it doesn’t open the Strait of Hormuz.
On the domestic front, traders seem confident that the Federal Reserve (Fed) won’t make any dovish monetary policy adjustment this year. According to the CME FedWatch tool, the odds of the Fed holding interest rates steady or above the current range of 3.50%-3.75% in the December meeting are 97.3%, significantly up from 32.4% seen a week ago.
Though the Japanese Yen (JPY) trades lower against the US Dollar, the former is up against major Asian and European currencies, being a safe-haven currency.
USD/JPY technical analysis
USD/JPY jumps higher to near 159.60 during the day. The pair holds a clear bullish near-term bias as price extends above the rising 20-day Exponential Moving Average (EMA) near 158.10, keeping the broader uptrend intact after the brief dip toward 157.70. The recent rebound from that pullback low and the swift return above the short-term average indicate persistent buying on shallow corrections.
The 14-day Relative Strength Index (RSI) rises above 60, shows positive momentum, and supports scope for further upside while trend-following signals remain aligned.
Initial resistance emerges at the recent peak around 160.00, with a sustained break paving the way toward the 160.50 area as the next upside objective. On the downside, immediate support stands at 158.70, protecting the more important floor at 157.50 that coincides with the last significant reaction low. A daily close below 157.50 would weaken the bullish structure and expose deeper retracement toward the March 5 low of 156.46.
(The technical analysis of this story was written with the help of an AI tool.)
US Dollar FAQs
The US Dollar (USD) is the official currency of the United States of America, and the ‘de facto’ currency of a significant number of other countries where it is found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
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