USD/JPY Holds Above 160 as BoJ and Fed Decisions Take Centre Stage

The confirmation of a US-Iran ceasefire has improved risk sentiment and pushed oil prices, bond yields, and the US dollar lower. However, USD/JPY has remained resilient above 160.00, supported by record speculative short positions against the Japanese yen. With geopolitical risks easing, attention is now shifting to this week's Bank of Japan and Federal Reserve policy decisions, which are likely to become the main drivers for the pair.

The outlook for USD/JPY could turn more bearish if the Bank of Japan delivers a hawkish message or signals further policy tightening. Record yen short positions also increase the risk of profit-taking, while easing Middle East tensions and lower oil prices may create a more favourable environment for potential intervention by Japanese authorities to support the currency.

Technically, the 160.00 level remains a key ceiling for USD/JPY, with support around 159.00. A deeper move towards the 157.50 to 158.00 zone would strengthen the bearish case, especially if the BoJ surprises markets or yen short positions begin to unwind.

USD/JPY Daily Chart