On Thursday, the USD/JPY currency pair saw a modest recovery, rebounding close to 156.90, which marks an increase of approximately 0.4% from a significant drop to 155.04 on Wednesday. This level represents the lowest point for the pair since early February. The recent decline in the pair broke through the late-April peak of around 160.70, disrupting the consolidation that followed, characterized by a series of long bearish candles. In the recent sessions, the pair has managed to stabilize within the range of 156 to 157.50.
The broader macroeconomic context influencing the US Dollar centers around the ongoing US-Iran ceasefire negotiations and tensions in the Strait of Hormuz. The Greenback’s drop on Wednesday was largely attributed to signals from the White House indicating progress toward a memorandum of understanding with Tehran. Furthermore, President Trump announced a temporary halt in US efforts to assist vessels stranded in the Strait, allowing for renewed diplomatic talks. This development in the geopolitical landscape contributed to a decline in oil prices and sent the Dollar Index back toward the 98 mark. However, the slight rebound in the Dollar on Thursday suggests a cautious sentiment as the initial optimism begins to fade.
Looking ahead, the upcoming US Nonfarm Payrolls (NFP) report is poised to be a critical catalyst for the market, with current expectations set around 62,000 new jobs, a significant drop from the previous tally of 178,000.
In the context of the Japanese Yen, traders are actively positioning around anticipated intervention from the Bank of Japan (BoJ). Reports have surfaced indicating that Japan’s Ministry of Finance has intervened multiple times throughout the past week to manage the currency’s stability after the US Dollar surpassed the 160.00 threshold. The prevailing narrative from Tokyo has emphasized the need to guard against turbulent fluctuations rather than targeting any specific exchange rate. This combination of intervention risk, coupled with declining oil prices and a reduced geopolitical premium, has seen the USD/JPY return to levels reminiscent of pre-conflict ranges.
From a technical standpoint, the four-hour chart shows USD/JPY trading at 156.93, indicating that the pair remains under bearish pressure in the near term. It is trading significantly below the 200-period Exponential Moving Average (EMA) at 158.35, suggesting that any rallies may be capped by medium-term trend resistance. The Stochastic RSI has recently cooled to the mid-50s, suggesting a decrease in downward momentum but not yet signifying a clear bullish reversal as long as price action remains under the EMA barrier.
On the upside, immediate resistance is identified at the 200-period EMA of 158.35, and a sustained breakthrough of this level would be necessary to mitigate the current bearish sentiment and pave the way for a more substantial recovery. With no notable technical supports indicated by moving averages or oscillators, traders are likely to monitor recent swing lows and intraday price reactions for possible demand zones, while the prevailing market setup continues to favor selling into strength below the 158.35 mark.
