USD/JPY Holds Near 160.00 as BoJ Hike Bets Meet Fed Tightening Expectations

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USD/JPY Holds Near 160.00 as BoJ Hike Bets Meet Fed Tightening Expectations

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USD/JPY

USD/JPY is trading near 160.00 as expectations of a Bank of Japan hike support the yen and expectations of tighter Fed policy support the dollar. ActionForex's technical read keeps an upward structure, with resistance at 159.96 and a target at 160.36.

USD/JPY remains near 160.00 on Thursday, having tested early September highs yesterday and today. The pair is holding above 159.50, so it is too early to speak of a sustained reversal lower, according to ActionForex.

Yen draws support from BoJ expectations and intervention talk

The yen is supported by expectations of a Bank of Japan rate hike in December. Preliminary CGPI data showed wholesale inflation rising 0.7% month-on-month in October, the first increase in three months, with the annual rate accelerating to 7.1% from 6.8%.

Atsushi Mimura, Japan's chief currency diplomat, warned about excessive exchange rate volatility. His comments brought the risk of currency intervention back into focus.

Dollar holds near April 2025 highs

The dollar is holding near highs last seen in April 2025. Markets are increasingly pricing in another Fed rate hike, including the possibility of a 50-basis-point move in December. The geopolitical premium surrounding the US-Iran confrontation also supports the currency.

Donald Trump has made clear that further strikes on Iran are unlikely for now, which supports hopes for a negotiated settlement. However, attacks in the region, including strikes on facilities associated with shipping through the Strait of Hormuz, mean a diplomatic resolution cannot be taken for granted.

Levels to watch: 159.96 and 159.00

On the H4 chart, the upward structure remains intact after a breakout from the 158.81 area. The nearest resistance is around 159.96, and a break above it would open the way towards 160.36. An intermediate correction towards 159.00 is possible, followed by a potential resumption of the upward move.

The MACD histogram is above zero, but the latest bar is smaller, which indicates weakening momentum. A break below 159.00 would shift attention to 158.81 and require a reassessment of the upward scenario.

Source: ActionForex

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