As of last Friday the USD/JPY was trading above the 160.000 mark with some sustained price action, however as the week has begun and April gets ready to start in a couple of days the currency pair is now around the 159.520 mark. However, as USD/JPY traders know we have seen this realm of 159.000 and above before – having taken place from the end of the second week until the last few days of January. However, this time around the ability of the USD/JPY to march within higher realms feels different.
It is always unwise to get too comfortable with any notions of being correct in Forex. The USD/JPY can provide plenty of surprises. The heights of the USD/JPY have been challenged before as mentioned above, but fears of potential interventions from the Bank of Japan – and their actual practice – have always kept Forex traders timid when the currency pair has reached too high. The Iranian war has changed some of these flavors though.
Intervention During a War Not Easy
As the USD/JPY traverses within the upper tier of it value range and sometimes shows the ability to track higher, financial institutions have always had to be ready for the BoJ to step in and crush long positions. The Bank of Japan doesn’t want the JPY to become too weak. However, as the war in Iran enters its second month, the BoJ might be hesitant to try and act too forcefully with selling of the USD/JPY, because as long as concerns remain about mid-term outlook due to rising energy prices risks are prevalent, the central bank has to practice caution too.
Among the risks is the idea that financial institutions and large players could believe the BoJ doesn’t have the total willingness to protect the USD/JPY until the Japanese central bank has more clarity. The ability of the USD/JPY to continue traversing near its upper tier the past two and half weeks, and traverse within values seen in January is a telltale. The USD/JPY was near 155.550 at the start of the Iranian war on the 27th of February.
Questionable Bank of Japan Policy
It is clear that financial institutions have been taking long positions of the USD/JPY over the long-term – look at the trend. And it may even be the case that the Japanese government wanted a weaker JPY, but above the 160.000 level, sparks of concern start to be heard and a psychological barrier is being challenged.
The Bank of Japan policy of low interest rates has been a constant discussion for decades – literally.
The new government in Japan may be viewed as having a hands off policy regarding the BoJ and a real desire to allow the free market to work, but it has to show it is watching too.
The new government doesn’t want to lose the confidence of its supporters.
USD/JPY Outlook for April 2026:
Speculative price range for USD/JPY is 156.000 to 161.500
If the USD/JPY remains near 160.000 or above it will create problems via the Japanese public who are not thrilled about the growing weakness of their currency which is causing creeping inflation. The broad currency market has shown USD centric strength persists the past month due to risk adverse attitudes. Shifting global behavioral sentiment is dangerous. Day traders may be tempted to use support levels as buying opportunities until there is a shift in the outlook about the Iranian war. The problem for speculators remains this, will the BoJ at some point intervene.
There is no telling when the Bank of Japan could and will act. And the central bank is known to keep their actions largely secret. Except to say, the BoJ likes financial institutions and speculators to remain cautious and not bet against the JPY. For the moment it looks like the USD/JPY could traverse higher, but at some point even those with bullish attitudes about the currency pair will become wary and likely start to turn cautious. Day traders need to be careful under the current circumstance. The war in Iran adds to the lack of clarity in a large manner, and makes the USD/JPY difficult to have a clear outlook about for the coming weeks.