USD/JPY tests 160.00 as ceasefire uncertainty keeps the Yen under pressure
- USD/JPY briefly breached 160.00 for the first time since July 2024, reviving intervention speculation from Tokyo.
- Japan's household spending dropped 1.8% YoY in February, far worse than the 0.7% decline expected by economists.
Trump's 8 pm ET deadline for Iran to reopen the Strait of Hormuz looms as ceasefire talks stall and oil tops $100.
USD/JPY traded in a choppy session on Tuesday, briefly touching around 160.00 before pulling back sharply to settle near 159.60, roughly flat on the day. The pair reached its highest level since July 2024, a threshold that previously triggered direct intervention from Japan's Ministry of Finance. The late-session decline came as headlines around ceasefire discussions picked up, though the pair held above its key moving averages.
On the Japanese Yen side, February household spending fell 1.8% YoY, significantly worse than the 0.7% decline consensus and the 1.0% drop recorded previously, suggesting consumer demand remains fragile. Labor cash earnings rose 2.7% YoY in February, matching expectations but slowing from 3.0% in January. The preliminary Leading Economic Index for February edged up to 112.4, slightly above consensus.
Despite the weak spending data, markets continue to price in roughly a 70% probability of a Bank of Japan (BoJ) rate hike later this month, with Governor Ueda's recent hawkish signals keeping expectations firm. Finance Minister Katayama flagged rising speculative activity in currency markets on Friday, and Prime Minister Takaichi said she would pursue direct talks with both Iran's leadership and President Trump. Thursday's Japanese Producer Price Index (PPI) data could further inform the BoJ's inflation calculus ahead of the April 28 meeting.
On the US Dollar side, the focus sits squarely on Wednesday's events. President Trump has set an 8 pm ET deadline for Iran to agree to a ceasefire and reopen the Strait of Hormuz, with Pakistan's Prime Minister requesting a two-week extension. Iran has rejected temporary ceasefire proposals and is pushing for a permanent end to the war.
The US struck targets on Iran's Kharg Island overnight, though oil infrastructure was reportedly spared. The FOMC Minutes are due Wednesday evening, alongside speeches from Fed officials Daly and Waller, which may offer further clarity on the rate path after the Fed held at 3.50% to 3.75% in March.
USD/JPY 15-minute chart
Technical Analysis
In the 15-minute chart, USD/JPY trades at 159.57. The near-term bias is mildly bearish as prices slip below the day’s opening area and edge closer to the 200-period exponential moving average, which is flattening around 159.70 and losing upside influence. The pair has been making lower intraday highs, while Stochastic RSI remains suppressed in the lower quartile of its range, signaling weak upside momentum and favoring continued pressure on immediate supports rather than a sustained rebound.
Initial support is located near 159.50, just beneath current prices, where a decisive break would expose the 159.30 region as the next intraday floor. Below that, focus would shift toward 159.00 as a deeper corrective objective. On the upside, the 200-period EMA around 159.70 now acts as first resistance, with a recovery through this cap needed to ease the bearish tone and open the way toward 159.90. A sustained move above 159.90 would neutralize the short-term downside bias and point to a retest of the 160.20 zone.
(The technical analysis of this story was written with the help of an AI tool.)
Japanese Yen FAQs
The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.
One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.
Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.
The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.
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