Yen Finds Relief, but BOJ Uncertainty Keeps USDJPY Elevated

USDJPY is trading near 159.141 after pulling back from its recent high around 160.461, suggesting that the yen has found some relief but not enough to signal a full reversal.

The two-week US-Iran ceasefire helped cool oil prices, which matters for Japan because the country remains heavily exposed to imported energy costs. That has reduced some of the stagflation pressure that weighed on the yen during the worst of the recent shock and allowed the pair to move away from its most stretched levels.

Even so, the recovery in the yen has remained limited. The ceasefire is still being treated as temporary, shipping through Hormuz has not fully normalised, and broader regional tensions continue to keep markets cautious. This means lower oil has improved the backdrop for Japan, but it has not fully repaired confidence in the country’s external outlook. As a result, USDJPY is still trading close to the upper end of its recent range, with the market unwilling to price in a cleaner downside move just yet.

At the same time, attention has shifted back to the Bank of Japan as the main domestic driver. Governor Kazuo Ueda has kept the possibility of further tightening alive, but markets are still unsure how strongly the BOJ is prepared to signal its next move ahead of the April 28 decision.

If the central bank leans more clearly toward another hike, the yen could gain firmer support. If policymakers remain cautious and focus more on the economic risks from the Middle East shock, traders may see that as a sign the BOJ still wants more time, leaving USDJPY vulnerable to another move back toward 160.

Explore how lower oil and BOJ uncertainty are shaping USDJPY’s next move.