USD/JPY Supported by Strong U.S. Data and Rising Energy Prices

USD/JPY remains supported by a combination of higher energy prices, U.S. economic strength, and ongoing weakness in the Japanese yen. Rising oil prices are particularly challenging for Japan, which relies heavily on energy imports, while they tend to support the U.S. dollar.

The main downside risk for USD/JPY is a meaningful slowdown in the U.S. economy, especially signs of weakness in the labour market. This week's key U.S. data releases, including JOLTS, ADP employment, ISM Services PMI, and Nonfarm Payrolls, will be closely watched for any signs that growth is starting to weaken.

On the Japanese side, markets continue to expect a Bank of Japan rate hike, making Governor Ueda's comments important. Any hesitation about further policy tightening could put additional pressure on the yen.

Technically, USD/JPY remains in an overall uptrend with momentum indicators still favouring the upside. The key level to watch is 160.00, which has previously attracted intervention from Japanese authorities. While a downside correction remains possible, the current outlook continues to favour buying dips unless U.S. economic data weakens significantly or key support levels break.

USD/JPY Daily Chart