Japanese Yen Holds Steady at 159: What about the Iran Ceasefire BoJ Impact?
- Japanese Yen holds steady at 159 during the two-week US-Iran ceasefire
- Market closely watching the BoJ rate hike expectations on April 28
- Diplomatic talks in Islamabad could shape the oil and Yen price next
- The yen is still down about 2% since the Iran conflict started
What Is Moving the USD/JPY Price Now?
The Iran ceasefire and upcoming BoJ rate hike might be a key point to move the price now.
The Iran Ceasefire: Japan imports around 90% of its crude oil from the Middle East. So, the Iran-US war impacted the economic growth and inflation, creating pressure on the Japanese Yen. However, the ceasefire has now helped push the oil prices lower and opened a hope for a turning point. As the Strait of Hormuz is not yet fully opened, it keeps the ceasefire deal at risk.
The Bank of Japan (BoJ) Rate Hike: A former Bank of Japan official has suggested the central bank is likely to raise its policy rate on April 28 to avoid falling behind in controlling inflation. When Japan raises interest rates, it makes yen-based investments more attractive, which pushes the yen higher and sends USD/JPY lower. So, markets are now closely watching for the BoJ policy rate.
US CPI Data Today: Today’s US inflation report is a major wildcard. A higher-than-expected reading would keep the US Federal Reserve on hold, supporting the dollar and pushing USD/JPY back up. A cooler reading could revive Fed rate cut bets and weaken the dollar, helping the yen recover further.
“The committee broadly agreed that it was too early to act, suggesting the Fed will likely remain on hold this year, in line with our view,” said analysts at JPMorgan.
What Should Traders Do?
The 20-day moving average near 158.90 is acting as a key support level. The pair needs to hold above this level to keep the broader uptrend intact, while the RSI is hovering near the neutral 50 level, showing no strong momentum.
- The BoJ rate hike would strengthen the yen and push USD/JPY lower. Watch BoJ Governor Ueda’s tone closely on April 28; any hawkish signal would move the pair fast.
- Wait for US CPI data today. Higher inflation strengthens the dollar, making USD/JPY higher. Lower inflation weakens the dollar, which means USD/JPY will be lower.
- If the Strait of Hormuz reopens fully, oil prices fall, and the yen gains further support.
For traders holding USD/JPY positions, keep position sizes tight this week. Volatility is higher, and both geopolitical and policy headlines can move this gopher sharply and quickly.
