Buying USDJPY up to 162.00

The USDJPY pair is now hovering around the key 160.00 level—a solid multi-year resistance. However, the current macroeconomic environment appears strong enough to finally break through this threshold.

The Japanese economy maintains a delicate balance. On the one hand, steady wage increases add fuel to the inflation fire; on the other, anemic domestic demand and looming external risks cap GDP growth. The Bank of Japan (BoJ) has cemented its hawkish posture with a recent 0.75% interest rate hike and made clear that more is on the way. To tame stubborn consumer prices, the regulator stands ready to raise borrowing costs as early as its next meeting. Yet, real GDP growth in the fourth quarter (Q4) of 2025 came in significantly weaker than expected—just 0.1% year-on-year. This exposes the fragility of the country’s economic recovery. The widening gap between monetary tightening and feeble activity puts the yen in a difficult position. The BoJ is caught between a rock and a hard place: higher interest rates support the national currency, but sluggish macroeconomic data and a vast yield differential with the US dollar weigh heavily on it.

Japan’s domestic foreign exchange market is also running hot. Local authorities are talking up the yen to stem its decline near the critical 160.00 level. Officials from the Ministry of Finance have stepped up their rhetoric, issuing warnings of “decisive action” and even hinting at the possibility of coordinated intervention with the United States in the Forex—a strong “no” for speculative players. Still, it's doubtful whether these measures would be effective. History shows that even the interventions of 2022 and 2024 only provided temporary relief. As a rule, the market quickly finds its way back to a weaker yen, driven by the ongoing monetary divergence between the BoJ and the Federal Reserve.

The final recommendation:

— Buy USDJPY at the current price, aiming for 162.00 within the next couple of months;

— Place Stop Loss 1% below the entry point to manage risks if the market plays against us.