Potential currency interventions are not threat to USDJPY rally

The USDJPY currency pair has been moving within an ascending channel for a month and a half, and this trend shows no signs of fatigue. Quotes are currently trading near February’s high of 155, increasing seller agitation. However, the bears’ incentive is only strong enough to slow the dollar's advance against the yen. After a temporary pause, the price has every chance to reach the 156.5 level.

The technical picture favors USDJPY buyers. Both the RSI and the Stochastic Oscillator remain far from overbought territory, not putting a spoke in the wheel of further growth. Besides, the 155 level serves more as a psychological threshold, rather than a strong resistance. Key challenges—the aforementioned 156.5 and January’s peak range of 158–159—lie ahead. Given a golden cross pattern’s emergence on the USDJPY daily chart and a convergence of the 50- and 200-day exponential moving averages (EMAs), there is a high probability that the dollar will eventually break through these key resistance levels.

The Japanese currency has been under persistent pressure since Sanae Takaichi was elected as the country's new Prime Minister. She was initially considered a supporter of active economic stimulus, and her performance over the past month has only reinforced this public perception. Speaking in parliament on Wednesday, Takaichi said that Japan's elevated inflation rate was driven by temporary food price increases rather than sustained factors such as wage growth, suggesting there is no current reason to tighten monetary policy further.

Bank of Japan Governor Kazuo Ueda expressed support for the new state position in his recent speech, confirming investors' expectations of a pause in the rate hike cycle. Under these circumstances, currency interventions seem to be the only way to preclude the yen’s fall. However, analysts surveyed by Reuters and Bloomberg consider these actions futile as long as Japan's economic policy remains strictly stimulative. Any local decline in USDJPY is likely to be temporary, with the pair ultimately resuming its upward trend.

Consider the trading plan down below:

Buy USDJPY between 154 and 155, with Take profit at 156.5 and Stop loss at 153.