Japanese Yen Forecast: USD/JPY 4% Rally Challenges Post-Intervention Downtrend

USD/JPY: near-term bias has improved, but a trend reversal is unconfirmed. The roughly 4% rebound and firmer momentum make the pair more vulnerable to further upside, but it is approaching a significant resistance confluence around 159.75. A sustained break and weekly close above that area would strengthen the case that the post-intervention downtrend is weakening; failure there would leave the rally vulnerable to reversal.

The fundamental balance remains two-sided: elevated U.S. yields support the dollar’s carry advantage, while stronger Japanese inflation could reinforce expectations of BoJ tightening and support the yen. Renewed intervention risk also makes sharp yen gains possible even if the broader rate differential remains dollar-supportive.

The key near-term catalysts are U.S. core PCE, Japanese CPI and U.S. nonfarm payrolls, which could shift expectations for the Fed–BoJ policy gap. Traders should watch whether price holds the 157.70–158.08 support area and, more importantly, whether it breaks below 156.67 on a weekly closing basis; the latter would strengthen the case for the prior bearish trend resuming.