USD/JPY eyes historic 162 price level as dollar bulls charge against yen
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WITH three decisive breakouts in the past two weeks, the narrative around USD/JPY has shifted back in strong favour of the bulls. Having cleared a prolonged period of consolidation, attention is now turning to the psychologically significant 160.00 level and the previous peak near 162.00, with technical structure increasingly dictating near-term direction.
Fundamentally, the US dollar remains supported by resilient economic data and persistent global uncertainty. Geopolitical tensions in the Middle East have contributed to intermittent risk aversion, encouraging demand for the dollar as a safe-haven currency. The latest US CPI data released on Mar 11 showed headline inflation holding at 2.4 per cent year-on-year, in line with expectations, while monthly CPI rose 0.3 per cent. Core CPI increased 0.2 per cent month-on-month, matching forecasts but moderating slightly from the previous reading. Contained but persistent inflation continues to sustain the interest-rate differential between the United States and Japan, a structural factor underpinning USD/JPY.
From a technical perspective, the market structure continues to favour the upside. On the daily timeframe, USD/JPY produced break-of-structure formations on Mar 3, 9, and 12, each establishing higher highs and reinforcing the prevailing bullish trend. The sequence of higher highs and higher lows indicates continued buyer dominance.
Attention is therefore shifting towards retracement levels where a possible support may emerge. The primary support region lies between 157.20 and 156.40, an area of prior consolidation that may act as a near-term demand zone. Should the market retrace further, additional structural support can be identified between 155.20 and 153.80, corresponding with earlier accumulation levels within the broader uptrend.
Should the currency pair hold above these zones, it would preserve the bullish structure visible on the daily timeframe. On the upside, 160.00 represents the next immediate resistance, with a sustained break potentially bringing 162.00 into focus. This level carries more than technical significance, as it historically marks the threshold where Japan’s Ministry of Finance deployed tens of billions in yen-buying intervention in 2024. While the Bank of Japan has since raised rates to a three-decade high, yen weakness has persisted as the rate differential remains relatively wide for incremental tightening to shift sentiment meaningfully.
For now, USD/JPY still favours the upside, though bulls should monitor the speed of depreciation as Japanese authorities historically respond more to the velocity of moves than to absolute levels, making intervention risk contingent on momentum.
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The writer is dealer at Phillip Nova
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