【Dollar/Yen pares near 160, now asked is not when it resumes rising but where it will stop falling】

【USD/JPY stalls just shy of 160, now the question is not “when will the ascent resume” but “where will it stop rising”】

In the current FX market, the dollar/yen has risen to theupper 159sbefore being pulled back recently to thelower to mid 158srange. According to Reuters, as of the 17th the dollar dropped to around158.22yen, which could mark about the largest weekly decline in roughly nine weeks. The backdrop is that heightened tensions surrounding the Middle East have somewhat cooled, easing demand for the dollar as a safe haven. In other words, the factor that had been supporting the yen’s depreciation—“dollar buying due to geopolitical risk”—has weakened a bit, making a one-way move harder for the market.

However, it may be premature to say the yen’s uptrend has fully reversed. Bank of Japan Governor Ueda did not explicitly signal a rate hike in April, cooling expectations for early tightening that had been mounting in the market. Reuters reports that, at the start of the month, expectations for a April rate hike were up to about 70%, but subsequently fell to around10%. At the same time, the BOJ has not ruled out the possibility of an additional rate increase, and Reuters surveys show that about two-thirds of economists expect the policy rate to be raised to 1.00% by the end of June. In other words, the current view is naturally that “April could be a no-change, but the tightening path remains alive.”

Furthermore, there remains vigilance on the Japanese side regarding currency movements. The Finance Minister recently suggested that, in addition to geopolitical factors,speculative tradinghas also had a significant impact, and there were indications of strengthened currency cooperation between Japan and the United States. In addition, Governor Kanda of the Asian Development Bank warned that if the BOJ acts too slowly against inflation, downside pressure on the yen could intensify. The 160-yen vicinity remains a price range where authorities are likely to issue stronger warnings, and market participants are acutely aware of this.

For individual investors, the current point is not to decide in one shot whether the yen will continue to weaken or reverse to strength.“whether the yen will continue to weaken or reverse to strengthen”It’s true that the U.S.-Japan interest rate gap continues to support USD/JPY, but some dollar-buying catalysts have faded recently, and expectations for the BOJ’s next move still linger. In such a scenario, it is likely advantageous for risk management to focus more on potential pullbacks or selling opportunities at rallies, rather than chasing highs. In particular, during volatile early London or early New York sessions—times with typically larger price moves—determining whether the market is in a “trending phase” or a “swinging phase” will become more crucial for this week’s USD/JPY moves.