USD/JPY continued its advance on Monday, reaching 159.46. The Japanese yen therefore remains under pressure near the key 160.00 level against the US dollar. This was the threshold that previously triggered currency market interventions by the Japanese authorities.
Data released on Friday confirmed that Japan spent JPY 11.7 trillion supporting its national currency at the end of April. As a result, the market received official confirmation of the large-scale intervention that traders had previously only suspected.
With the exchange rate approaching 160.00 once again, investors continue to assess the likelihood of further action from the Bank of Japan. The market remains divided over whether the central bank will opt for another interest rate increase this month. Uncertainty is being amplified by risks associated with the situation in the Middle East and its potential impact on the global economy.
Investor attention is now focused on upcoming speeches by Bank of Japan Governor Kazuo Ueda. His comments could provide fresh clues regarding the future direction of monetary policy.
Additional pressure on the yen came from disappointing corporate investment data. Capital expenditure by Japanese companies in the first quarter showed no growth compared with the previous year. This points to slowing business investment activity and raises concerns about the sustainability of domestic economic growth.
Technical Analysis
On the H4 chart, USD/JPY has formed a consolidation range around the 159.00 level. A breakout to the upside is developing a growth wave towards 159.77. We expect this target to be reached today, followed by a pullback towards 159.00. This scenario is supported by the MACD indicator, whose signal line remains above zero and is pointing firmly upwards, indicating potential for further gains.
On the H1 chart, the market is forming an upward structure towards 159.60. A corrective move to 159.20 may follow before another advance towards 159.60 and potentially 159.77. The Stochastic oscillator supports this outlook, with its signal line above the 50 level and rising towards 80, suggesting that bullish momentum remains intact in the short term.
Conclusion
USD/JPY remains firmly supported as the yen struggles against weak domestic fundamentals and ongoing global uncertainty. With the pair approaching the critical 160.00 level, traders are increasingly focused on the risk of renewed intervention by Japanese authorities and any policy signals from the Bank of Japan.
