Photo by Cullen Cedric on Unsplash
 

USD/JPY rose to 158.61 on Friday, continuing its upward movement as the yen remains under pressure. Investors are adopting a wait-and-see approach ahead of the Bank of Japan’s (BOJ) monetary policy decision.

The BOJ recently kept rates unchanged after a hike to 0.75% in December – the highest level in nearly 30 years. Market participants are now focusing on comments from BOJ Governor Kazuo Ueda for clues on the timing of the next rate hike, especially amid the yen’s persistent weakness.

Recent data showed a slowdown in core inflation in December, but it remains above the BOJ’s 2% target. Additionally, fiscal risks have added pressure on the yen, as Prime Minister Sanae Takaichi prepares to dissolve parliament and call early elections, a move aimed at consolidating power and promoting fiscal expansion.

As USD/JPY approaches the psychologically significant 160 level, market expectations of possible currency intervention are growing, leading to increased caution among traders.
 

Technical Analysis
 

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On the H4 chart, USD/JPY has formed a consolidation range around 158.50. The breakout to the upside has opened the potential for a rise to 160.00. After reaching this level, a potential decline to 158.00 may occur. The MACD indicator supports this bullish scenario, with its signal line above zero and pointing upward.
 

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On the H1 chart, a growth wave structure is forming towards 159.30, with a possible correction to 158.70 before continuing the ascent to 160.00. This scenario is confirmed by the Stochastic oscillator, whose signal line is above 50 and pointing towards 80.
 

Conclusion

USD/JPY continues to rise, driven by the yen’s weakness and market expectations of further BOJ rate hikes. As the pair approaches the 160 level, the potential for currency intervention increases, keeping market participants cautious. Technically, the upward trend remains intact, with key levels to watch at 160.00 and 158.00.

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