Key Moments
- USD/JPY slips during Thursday’s Asian session, halting a three-day advance but remains above the 159.00 level.
- Reports of a potential US-Iran ceasefire and progress on Strait of Hormuz shipping routes temper the impact of hotter US PCE inflation data.
- USD/JPY holds a bullish structure above the 100-period SMA on the 4-hour chart, with key Fibonacci resistance near 159.63, 160.66, and 162.13.
Dollar-Yen Pullback Amid Focus on Tokyo Inflation and Jackson Hole
The USD/JPY pair comes under selling pressure in Asian trading on Thursday, ending a three-session winning run. The retreat is modest, however, with spot prices still trading above the 159.00 handle as market participants turn their attention to upcoming Tokyo inflation figures and the Jackson Hole Symposium on Friday.
Hormuz Optimism Caps Dollar Upside Despite Firm US Inflation
Improved sentiment around a possible United States-Iran peace agreement and signs of progress on reopening the Strait of Hormuz are limiting the upside in the US Dollar and weighing on USD/JPY. Russian state media reported that the US and Iran have reached a new ceasefire deal that would be announced in the coming days. Another report said that Iran and Oman have agreed on commercial shipping routes through the Strait of Hormuz.
These developments are offsetting the impact of expectations for at least one US Federal Reserve interest rate increase in 2026 and are keeping Dollar buyers cautious. Data from the US Commerce Department on Wednesday showed that the Personal Consumption Expenditures (PCE) Price Index rose 3.7% over the 12 months in July, unchanged from the prior month and slightly above consensus forecasts. The figures highlight persistent price pressures and support the argument for further Fed policy tightening.
Market Awaits Fed Commentary; Structural JPY Headwinds Persist
Against this backdrop, investors are focused on Fed Chair Kevin Warsh’s remarks scheduled for Friday, which are expected to be examined closely for indications on the central bank’s future policy path. The guidance could be pivotal for near-term US Dollar performance.
On the Japanese side, the Yen continues to face challenges in attracting strong demand. Concerns over Japan’s deteriorating fiscal outlook and the wide interest rate differential between the US and Japan remain significant, even as markets consider the possibility of faster Bank of Japan rate hikes. These factors suggest caution is warranted for traders positioning aggressively for further downside in USD/JPY.
USD/JPY Technical Picture – 4-Hour Chart
On the 4-hour timeframe, USD/JPY maintains a broadly positive bias, trading above both the 100-period Simple Moving Average (SMA) and the 38.2% Fibonacci retracement of the decline from a four-decade high.
| Level | Type | Price |
|---|---|---|
| 100-period SMA | Initial support | 158.88 |
| 38.2% Fibonacci retracement | Support | 158.60 |
| 50.0% Fibonacci retracement | Immediate resistance | 159.63 |
| 61.8% Fibonacci retracement | Resistance | 160.66 |
| 78.6% Fibonacci retracement | Resistance | 162.13 |
| Lower Fibonacci level | Support | 157.33 |
| Lower Fibonacci level | Support | 155.27 |
| Cycle high zone | Key resistance area | Near 163.99 |
On the topside, the first resistance is located at the 50.0% retracement at 159.63, followed by the 61.8% and 78.6% Fibonacci levels at 160.66 and 162.13, respectively, ahead of the cycle high region near 163.99.
On the downside, the 100-period SMA around 158.88 offers initial support. Additional buying interest is seen near the 38.2% retracement at 158.60, with lower Fibonacci support levels emerging at 157.33 and 155.27.
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