Published: 18 March 2026,08:34
Daily Market Analysis New
*The Japanese Yen remains structurally weak, with USD/JPY trading near 159, reflecting USD strength rather than yen recovery.
*Policy divergence between the Fed and the Bank of Japan continues to favor USD inflows, keeping the yen under pressure.
*Japan’s heavy reliance on imported energy and elevated oil prices exacerbate trade deficits and weaken the yen.
Market Summary:
The Japanese Yen (JPY) remains structurally weak, with USD/JPY trading near the 159 level despite a slight pullback over the past two sessions. This modest yen stabilization is largely a function of USD consolidation rather than intrinsic strength. Even though there has been some temporary relief from easing oil prices and improved risk sentiment, the yen continues to struggle to attract sustained safe-haven flows, highlighting a major shift in market dynamics where the USD not JPY is the dominant defensive currency during the current geopolitical crisis.
The primary driver of yen weakness remains the wide policy divergence between the Bank of Japan and the Federal Reserve. While the Fed maintains interest rates in the 3.50%–3.75% range, the Bank of Japan is expected to keep rates around 0.75%, preserving a significant yield gap. Although Governor Kazuo Ueda has signaled confidence in rising wages and inflation, and markets are beginning to price the possibility of further tightening, policy normalization in Japan remains slow and cautious. This continues to encourage capital outflows and supports demand for higher-yielding USD assets.
Another critical factor is Japan’s vulnerability to energy price shocks. The recent surge in oil prices driven by Middle East tensions, attacks on energy infrastructure, and risks surrounding the Strait of Hormuz has significantly worsened Japan’s import costs and trade balance. Even though oil prices have recently pulled back slightly due to higher US inventories, they remain elevated, keeping pressure on the yen. This contrasts sharply with the US, which benefits from higher oil prices due to its role as a major energy producer, further widening the divergence between the two currencies.
Finally, intervention risk is becoming a key short-term driver. As USD/JPY approaches the 160 level, Japanese authorities have increased verbal warnings, and markets are becoming more sensitive to the possibility of direct intervention. Political developments, including meetings between Japanese leadership and the US, add another layer of complexity to FX dynamics. However, any intervention is likely to provide only temporary support unless accompanied by a more aggressive shift in monetary policy. As long as interest rate differentials remain wide and energy-related pressures persist, the yen is expected to stay structurally weak, with only brief periods of strength driven by positioning or policy speculation.
Technical Analysis
USD/JPY is showing early signs of structural fatigue after failing to sustain its push above the 159.30 resistance level, a zone that recently capped the upward move. Price action has begun to consolidate just below this barrier, suggesting that bullish momentum is weakening following the prior rally. From the swing low near 152.60, the pair advanced approximately 4.5% to reach recent highs, but the inability to extend beyond resistance raises the risk of a near-term corrective phase.
The current price behavior carries important technical implications. The pair is now drifting back toward the rising trendline support, which has underpinned the broader uptrend since mid-February. A decisive break below this trendline currently converging near the 157.50 region would signal a breakdown in the short-term bullish structure and could trigger a deeper pullback toward the 155.60 support level. Additionally, the failure to hold near the highs suggests that the recent move may be transitioning into a distribution phase rather than continuation.
Momentum indicators are also reflecting this loss of strength. The Relative Strength Index has turned lower and is now hovering near the mid-40 level, slipping below the neutral 50 threshold and indicating that bullish momentum has faded. Meanwhile, the Moving Average Convergence Divergence is rolling over, with the MACD line crossing below the signal line and the histogram expanding in negative territory, reinforcing the shift toward bearish momentum. Overall, while the broader trend remains upward, USD/JPY appears to be entering a corrective phase, with the trendline support acting as the key trigger level that may determine whether the pullback deepens further.
Resistance Levels: 159.30, 161.35
Support Levels: 157.50, 155.60
Trade forex, indices, metal, and more at industry-low spreads and lightning-fast execution.
Sign up for a PU Prime Live Account with our hassle-free process.
Effortlessly fund your account with a wide range of channels and accepted currencies.
Access hundreds of instruments under market-leading trading conditions.
Trading Platforms
Learn
About PU Prime
Corporate
Please note the Website is intended for individuals residing in jurisdictions where accessing the Website is permitted by law.
Please note that PU Prime and its affiliated entities are neither established nor operating in your home jurisdiction.
By clicking the "Acknowledge" button, you confirm that you are entering this website solely based on your initiative and not as a result of any specific marketing outreach. You wish to obtain information from this website which is provided on reverse solicitation in accordance with the laws of your home jurisdiction.
Thank You for Your Acknowledgement!
Ten en cuenta que el sitio web está destinado a personas que residen en jurisdicciones donde el acceso al sitio web está permitido por la ley.
Ten en cuenta que PU Prime y sus entidades afiliadas no están establecidas ni operan en tu jurisdicción de origen.
Al hacer clic en el botón "Aceptar", confirmas que estás ingresando a este sitio web por tu propia iniciativa y no como resultado de ningún esfuerzo de marketing específico. Deseas obtener información de este sitio web que se proporciona mediante solicitud inversa de acuerdo con las leyes de tu jurisdicción de origen.
Thank You for Your Acknowledgement!
