Key Moments
- USD/JPY is trading lower at 155.79 on Friday, heading for a second straight weekly decline.
- Mixed messages from Bank of Japan officials and slower Tokyo inflation are clouding the policy outlook.
- Technical setup points to short-term downside risk for USD/JPY, with potential for corrective rebounds.
Macro Backdrop and Policy Uncertainty
USD/JPY is trading lower at 155.79 on Friday, with the yen still under pressure as the week draws to a close. The pair is on course to log a second consecutive weekly loss, reflecting persistent uncertainty about the future direction of Bank of Japan (BoJ) policy.
During the week, the Japanese government nominated two academics to the BoJ board who are known for supporting accommodative monetary policy. Following a meeting with BoJ Governor Kazuo Ueda, Prime Minister Sanae Takaichi voiced concerns about the prospect of additional interest rate increases.
In contrast, board member Hajime Takata has advocated for further policy tightening and has stated that the bank’s price stability objective is close to being met.
Governor Ueda has indicated that the BoJ will closely evaluate incoming data at its March and April meetings, keeping open the possibility of a near-term hike in short-term rates.
Inflation Developments in Tokyo
Recent economic data have also been shaping market views. Inflation in Tokyo has slowed to its lowest level in more than a year, helped in part by government subsidies for utility costs. This has strengthened expectations that the central bank may hold off on tightening policy in the short term.
Technical Picture: Key Levels and Indicators
| Timeframe | Key Level(s) | Bias / Scenario | Indicator Signals |
|---|---|---|---|
| H4 | 156.15, 155.50, 157.50, 154.18, 151.82 | Consolidation around 156.15 with potential move to 155.50; upside breakout targets 157.50; downside break points to 154.18 then 151.82 | MACD signal line above zero but sloping down, supporting a bearish scenario |
| H1 | 156.15, 155.40 | Downward wave toward 155.40 after breaking below 156.15; possible correction back to 156.15 | Stochastic signal line below 50 and pointing lower, confirming short-term bearish bias |
H4 Chart: Consolidation with Downside Risk
On the H4 chart, USD/JPY is consolidating around the 156.15 level. A move lower toward 155.50 is anticipated for Friday, followed by a potential corrective rebound back to 156.15. A sustained break above this consolidation zone would open the path for further gains toward 157.50.
Alternatively, a decisive move below the range would point to a continuation of the broader decline, initially targeting 154.18 with room for an extension toward 151.82. From a technical standpoint, this bearish outlook is supported by the MACD indicator, where the signal line remains above zero but is clearly trending lower.
H1 Chart: Short-Term Bearish Tone
On the H1 timeframe, the pair has already slipped below 156.15 and is developing a downward wave toward 155.40. A subsequent rebound back to 156.15 remains a possibility. The short-term negative bias is reinforced by the Stochastic oscillator, whose signal line is below 50 and pointing down.
Conclusion
USD/JPY is weakening against a backdrop of unresolved questions about the BoJ’s next steps. Market participants are balancing more hawkish commentary from some policymakers against cautious messaging from the leadership and softer Tokyo inflation data. Technical signals currently favor additional short-term downside for the pair, although corrective rallies cannot be ruled out.
By RoboForex Analytical Department
Disclaimer
Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
