USD/JPY traded at 159.16 on Friday. The yen is retreating slightly but appears less weak than previously, amid a two-week truce between the US and Iran. The decline in oil prices following the announcement of the truce has partially reduced stagflationary risks and provided some support to the Japanese currency.
Investor focus is on the upcoming talks in Islamabad, where Vice President JD Vance will lead the US delegation. Meetings with the Iranian side are expected to clarify the prospects for further de-escalation.
However, sentiment remains subdued. Continued strikes in the region and ongoing disruptions in the Strait of Hormuz continue to put the fragile truce at risk, driving ** market uncertainty.
The yen has remained under pressure since the conflict began, losing approximately 2%. Investors are factoring in rising energy prices, which add to inflationary pressures while dampening Japan’s growth outlook.
The market is now awaiting signals from Bank of Japan Governor Kazuo Ueda ahead of the 28 April meeting, which could set the future direction of monetary policy.
Technical Analysis
On the H4 USD/JPY chart, the market is forming a consolidation range around the 158.85 level, currently extending up to 159.30. A move higher towards 159.85 (testing from below) is expected today. Subsequently, a potential decline towards the 157.72 level will be considered. Technically, this scenario is confirmed by the MACD indicator, whose signal line is below zero and pointing upwards from low levels.
On the H1 chart, the market is forming a wave of growth towards the 159.82 level. A wave extension to the 160.00 level is possible. Thereafter, a downward wave to at least 158.85 is expected. Technically, this scenario is confirmed by the Stochastic oscillator, with its signal line below the 80 level and pointing strictly downwards.
Conclusion
USD/JPY has stabilised as the yen shows tentative signs of recovery, benefiting from the temporary truce between the US and Iran and the resulting pullback in oil prices. However, the fragility of the ceasefire – underscored by continued strikes and disruptions in the Strait of Hormuz – means that energy-driven risks remain very much alive. The yen has lost approximately 2% since the conflict began, and market attention now turns to upcoming diplomatic talks in Islamabad and BOJ Governor Ueda’s signals ahead of the 28 April policy meeting. Technically, a short-term bounce in USD/JPY appears likely, but the broader trajectory will depend on whether de-escalation holds or tensions reignite.
