USD/JPY rose to 159.40 on Friday, with the Japanese yen surrendering all the gains accumulated since the beginning of this week. Pressure intensified following comments from Bank of Japan Governor Kazuo Ueda, who failed to provide clear guidance on rates ahead of the next meeting.
Ueda noted that the regulator must balance rising inflation against the risks of an economic slowdown. Ahead of previous rate decisions, he had provided more explicit signals, and the market had expected a similar tone.
At the same time, investors acknowledge that the BoJ may raise its inflation forecasts amid rising energy prices.
Earlier in the week, the yen had strengthened following statements from Finance Minister Satsuki Katayama regarding coordination with the US Treasury on foreign exchange policy and a readiness to intervene in the market if necessary.
Technical Analysis
On the H4 USD/JPY chart, the market is forming a consolidation range around the 159.00 level, currently extending up to 159.25. A move higher towards 159.90 (testing from below) is likely, followed by a possible decline back to the 159.00 level. Technically, this scenario is confirmed by the MACD indicator, whose signal line is below the zero level and pointing firmly upwards.
On the H1 chart, the market is forming the structure of the next upward wave towards the 159.60 level. A wave extension to 159.90 is possible. Subsequently, a decline to at least 159.00 is likely. Technically, this scenario is confirmed by the Stochastic oscillator, with its signal line above the 80 level and pointing firmly upwards.
Conclusion
USD/JPY has returned to positive territory, with the yen erasing all its weekly gains after BOJ Governor Ueda’s ambiguous rate guidance. Markets had anticipated clearer signals ahead of the upcoming meeting, but instead received a balanced assessment of competing inflation and growth risks. While the BoJ may yet raise its inflation forecasts due to higher energy prices, the lack of explicit hawkish communication has weighed on the currency. Earlier intervention warnings from the Finance Minister provided only temporary support. Technically, further upside towards 159.90 appears likely before any potential pullback, with the pair’s direction hinging on whether Ueda delivers clearer signals at the April meeting.
