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The USD/JPY pair attracts some sellers during the Asian session on Friday, and for now, seems to have snapped a three-day winning streak back closer to its highest level since July 2024, touched earlier this month. Spot prices currently trade just above mid-159.00s, down 0.15% for the day, though the downside potential seems limited. The Japanese Yen (JPY) approached the 160.00 threshold level against its American counterpart that authorities have previously used as a reference point for intervention or intervention threats. This, along with a modest US Dollar (USD) downtick, exerts some downward pressure on the USD/JPY pair. However, concerns that the war-driven surge in energy prices would weigh on Japan’s trade balance and economic outlook might cap any meaningful JPY appreciation. Furthermore, a sustained increase in Crude Oil prices would reignite inflationary pressures and create a classic stagflationary environment. This might complicate the Bank of Japan’s (BoJ) normalization efforts as rate hikes would slow an economy already absorbing an energy shock, which, in turn, might keep a lid on the JPY. Adding to this, the aggressively repricing of Federal Reserve (Fed) rate expectations favors the USD bulls and should limit losses for the USD/JPY pair. Despite US President Donald Trump’s decision to delay strikes on Iran’s energy infrastructure and extend the deadline to reopen the Strait of Hormuz until April 6, market participants seem worried about a further escalation of tensions in the Middle East. This, in turn, remains supportive of elevated Crude Oil prices and continues to fuel inflation concerns, which might force major central banks, including the Fed, to adopt a more hawkish stance and consider raising interest rates. The aforementioned fundamental backdrop makes it prudent to wait for strong follow-through selling before confirming that the USD/JPY pair has topped out in the near-term and positioning for…

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Filed under: News - @ March 27, 2026 7:27 am