Selling USDJPY with 158.00 target upon testing resistance

Over the past few days, the USDJPY pair has been regaining its footing after falling sharply on March 23. The Middle East turbulence remains the greenback’s primary growth engine. Even Monday’s news about diplomatic efforts failed to shake the market's cautious stance, leaving the dollar on a solid ground and triggering heightened volatility.

Meanwhile, the yen appears to be under the hammer. The Bank of Japan (BoJ) adheres to a moderately hawkish rhetoric, hinting at potential rate hikes, but the government continues its budget stimulus program aimed at taming inflation. This puts the regulator between a rock and a hard place, making it nearly impossible to justify monetary tightening under current conditions. The appointment of new members of the BoJ Policy Board—known as advocates of a soft stance—further reduces the likelihood of an imminent rate hike.

Now, let’s turn to the US Federal Reserve (Fed). The American central bank seems alert yet restrained. Officials are closely watching inflation data to see whether the situation improves. Until the Consumer Price Index (CPI) shows a sustained slowdown, rate cuts are off the table. At the same time, US business activity dropped to an 11-month low, while private sector employment contracted for the first time in a year. Given these headwinds, monetary tightening doesn’t appear to be an option. The policy gap between the Fed and other more hawkish central banks sets the stage for the pair’s further decline.

From a technical standpoint, USDJPY is now recovering, with prices approaching the 159.90 resistance level—a threshold the pair has unsuccessfully tested multiple times. The Chaikin Oscillator reveals a bearish divergence: while quotes go up, the indicator remains below its previous local high. This is a clear sign that bullish momentum is running on empty. What's more, red candles are soaking up the bulk of trading volume, signaling profit-taking and increasing the odds of a pullback from the targeted resistance.

Pay attention to the trading plan outlined below:

Sell USDJPY at the current price (159.40), with Take profit at 158.00 and Stop loss at 160.00.

The forecast is valid from March 26 till April 2, 2026.