USD/JPY trades close to 160.00 after Japan's CPI – More interventions required? – FX Analysis

As always, USD/JPY is playing its own game within all the FX craziness seen in 2026 – While most other major pairs have regained some strength against the US Dollar, the Yen remains weak.

Japan's latest inflation numbers surprised currency markets and added to the ongoing weakness of the yen. In April, the core consumer price index, which leaves out fresh food but includes energy, rose just 1.4% from a year earlier, below the expected 1.7% and much lower compared to other countries (as seen with Canadian PPI this morning for example, up 2% m/m!).

The Bank of Japan's preferred measure, the core-core CPI, which excludes both fresh food and energy, slowed to 1.9% from 2.4% in March. This is the lowest level since July 2024 and puts inflation back below the central bank's 2% target.

The main reason for this slowdown is the government's use of fuel subsidies, which are offsetting the impact of oil price shocks from the Middle East.

As a result, the weak inflation data means there is less pressure on the Bank of Japan to tighten its loose monetary policy right now.

This increases the gap between Japan's approach and that of other major economies. The yen has remained weak in foreign exchange markets since 2020, and officials at the Ministry of Finance are still looking for ways to address the situation.

On top of this, the US Dollar has been especially strong this year, supported by a firm Federal Reserve and a solid US economy.

As a result, the USD/JPY back to trading close to the key 160.00 level, implying failed interventions as seen in the past month.

If the Bank of Japan can't raise rates to support the yen, the Ministry of Finance may have to step in yet again to prevent a further decline – but this extra intervention could make the Yen lose its status of free floating currency.

Let's dive right into an intraday-timeframe analysis for USD/JPY.

Read More:

• Asia open: Stock markets surge on US-Iran peace progress and soft Japan CPI
• Cryptos pulled back but sentiment rebounds, Opportunity? – BTC and Ethereum (ETH) Technical Outlook
• Stock Markets stall, too early for the deal ? Dow Jones, Nasdaq and S&P 500 Intraday Levels

USD/JPY erased about 3/4 of its end-April intervention, with bulls happy to consistently fade the Ministry of Japan, with the fundamentals for the currency not changing the slightest.

Japanese PM Takaichi is still a dove, the Bank of Japan is still stuck below 1%, and Japanese inflation still pops lower compared to its G7 peers amid global inflation fears.

Something to keep your eyes on, particularly for mean-reversion traders, is the potential end to the Middle East conflict, which would ease hawkish stance across central banks, and this tends to help the yen – Looking at the charts, despite a tight 400 pip range since Monday, the RSI is slowing.

Let's take a closer look.

USD/JPY is indeed stuck in a very tight range between 158.80 to 159.20, with the 50-hour MA acting as support to the downside.

Looking at the current action after such a rally, overbought levels could simply be easing, indicating higher chances of an upside breakout.

But with the descending momentum, a selloff also makes technical sense.

The idea would be to watch the upper and lower bounds of the range to play a breakout.

Resistance levels

• mini-resistance 159.300
• 159.50 to 159.70 2026 Major Resistance (range highs)
• April 2024 160.00 to 160.40 Major Resistance
• June Mini resistance 160.70 to 161.00

Support levels

• 159.02 (50-Hour MA)
• Mid-range pivot 158.75 bull above, bear below
• December highs Major Pivot 157.50 to 158.00 (range lows)
• 156.00 Pivotal Support
• 155.00 Mini-Support

Safe Trades!

Follow Elior on Twitter/X for Additional Market News, interactions and Insights @EliorManier