USD/JPY Rises Again: Dollar Strong, Inflation Risks High

USD/JPY rose to 159.19, with the yen remaining near its one-month lows following comments from Bank of Japan Governor Kazuo Ueda. The regulator warned of rising inflation risks but did not provide any clear signals regarding a potential rate increase at the next BoJ meeting.

Ueda noted the need to closely monitor the impact of high oil prices on inflation in Japan but did not specify how much these factors could influence the regulator's decision in June.

At the same time, BoJ Deputy Governor Ryozo Himino confirmed that the central bank remains ready for further rate hikes. However, the timing and pace of policy tightening will depend on how the Middle East conflict affects the Japanese economy and inflation.

Investors also continue to closely monitor the situation surrounding US-Iran talks. Despite isolated signs of progress in negotiations, ongoing military actions and tensions keep currency markets on edge.

Technical Analysis

On the H4 chart, USD/JPY is trading within a consolidation range around 159.00 and is moving higher towards 159.60. A test of this level is likely, followed by a possible pullback to 159.00. The MACD indicator supports this scenario, with its signal line above zero and pointing firmly upwards, indicating continued bullish momentum.

On the H1 chart, USD/JPY is moving higher towards 159.50. A correction to 159.00 may follow, before a further rise towards 159.60 and potentially 159.90. The Stochastic oscillator confirms this scenario, with its signal line above 50 and pointing firmly upwards towards 80, indicating that short-term upside momentum remains.

Conclusion

USD/JPY continues its upward move as the dollar remains strong amid elevated inflation risks. The yen is hovering near one-month lows after BoJ Governor Ueda warned of rising inflation pressures but stopped short of signalling a near-term rate hike. While Deputy Governor Himino reaffirmed the BoJ's readiness to tighten policy further, the timing remains dependent on how the Middle East conflict impacts Japan's economy and inflation. Meanwhile, uncertainty persists around US-Iran negotiations, with isolated progress offset by continued military tensions. Technically, further upside towards 159.60–159.90 appears likely, with intervention risks remaining a key factor as the pair approaches psychologically significant levels.

By RoboForex Analytical Department

Disclaimer:

Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.