USD/JPY jumps and eyes 160.00 as Fed hawkishness lifts US Dollar

Yen weakens as Fed hints limited easing, Powell reinforces cautious stance

In his press conference, Fed Chair Jerome Powell struck a neutral stance, saying the central bank is taking a meeting-by-meeting approach and that the current policy stance is appropriate. He added that the main thing they are looking for in inflation is to see progress on goods inflation, "to understand if we are making progress."

Powell commented that the lack of progress in inflation would delay an interest rate cut, adding that "We believe we will see progress on tariff inflation, but may take more time."

Regarding the economy, he added that it is doing pretty well and that no one knows the effects of the Middle East conflict. He said that inflation overshoot is attributed to goods and tariffs.

Aside from Powell's press conference, the Fed held rates unchanged, with one dissenter: Fed Governor Stephen Miran.

US economic projections show the central bank is eyeing one 25-basis-point rate cut in 2026 and one in 2027. The economy is expected to grow 2.4% in 2026 and 2.3% in the following year. Inflation is projected to jump from 2.4% to 2.7%, with underlying prices expected to rise to 2.7%, up from 2.5%.

Yen traders wait for the BoJ

In Japan, the schedule will feature Industrial Production figures on March 19, followed by the Bank of Japan's monetary policy decision on Friday, in which the BoJ is projected to hold rates unchanged.

USD/JPY Price Forecast: Technical outlook

In the daily chart, USD/JPY trades at 159.81. The near-term bias stays bullish as price pushes further above the clustered simple moving averages around 156.50, confirming an established uptrend structure. The RSI at 67 shows firm upside momentum without yet entering extreme overbought territory, aligning with persistent buying pressure. The pair also respects an ascending support trend line from 152.10, reinforcing the series of higher lows and underpinning the current advance.

Immediate support emerges at 159.00, with the rising trend line and the 156.50 moving average zone forming a stronger demand band beneath. A break below that band would expose deeper support near 154.50, where prior consolidation lies. On the upside, initial resistance is seen near 160.50, ahead of the 161.50 area where the descending resistance trend line projected from 159.23 converges with recent swing highs. A daily close above 161.50 would confirm a continuation of the bullish leg and open the way toward higher highs in the coming sessions.

(The technical analysis of this story was written with the help of an AI tool.)

Japanese Yen FAQs

What key factors drive the Japanese Yen?

The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors.

How do the decisions of the Bank of Japan impact the Japanese Yen?

One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen.

How does the differential between Japanese and US bond yields impact the Japanese Yen?

Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential.

How does broader risk sentiment impact the Japanese Yen?

The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.