On the 17th of April the USD/JPY fell to a low of nearly 157.580, as of this writing towards the end of April the currency pair is once again above 160.160 as it touches its high water marks for the month. In fairness to the USD/JPY it did touch the 160.460 realm on the 30th of March. Thus, the currency pair has not quite yet hit its apex. But some traders may be murmuring under their breath, ‘just give it time’.
As of this writing WTI Crude Oil futures are trading above the $102.00 realm, nearly the same mark they were trading briefly on the 30th of March. Yes, on the 7th of April the WTI Crude Oil futures were above 106.00 USD, and the USD/JPY at that moment touched the 160.040 vicinity. The correlation of fear in the global marketplace and the value of the USD/JPY depending on the results of WTI Crude Oil is rather glaring. However, that is not the only ingredient in the Forex sauce.
The Japanese Yen Has Been Bullish
The 29th of April is Showa Day in Japan which signifies the start of Golden Week. The Bank of Japan however is certainly keeping an eye on the USD/JPY. The USD/JPY has touched the 160.000 level again today, after touching it the last time on the 7th of April as written above, but the currency pair has made it a habit to traverse over the 159.000 mark frequently during the past handful of weeks. The ability to touch highs and then move lower via a one month chart almost looks as if an invisible hand is causing selling when resistance levels are challenged.
The Bank of Japan does not announce when it is intervening, but some analysts will certainly suspect the BoJ is keeping a grasp on higher movement and fighting back from time to time. And that is exactly what the BoJ wants financial institutions to worry about, because they do not want the Japanese Yen to lose too much ground to the USD. However, when risk adverse fears have hit the global markets due to spikes in the price of WTI Crude Oil, there has not been a lot of power to hold back the bullish cascade in the USD/JPY upwards.
Vulnerable Bank of Japan and Federal Reserve
The BoJ continues to look vulnerable to the rising trend in the USD/JPY, but day traders must be careful, because there is a constant fear that the BoJ could send a shockwave through the Forex markets and protect the JPY – and sometimes get potential help from the U.S Federal Reserve.
The Fed is conducting its FOMC meeting at this moment and they will not do anything to the Federal Funds Rate today, but they will sound cautious about the rising energy costs that are a concern regarding inflation.
The USD/JPY is touching apex realms and both the BoJ and Fed have a problem.
President Trump wants lower interest rates, but if the price of Crude Oil remains elevated the Federal Reserve will not be able to easily maneuver either.
USD/JPY Outlook for May 2026:
Speculative price range for USD/JPY is 157.250 to 161.800
It is tempting to believe the USD/JPY can and should go higher. The 160.000 mark however is quite high from a historical perspective. Financial institutions will be nervous about betting to much against the BoJ in the coming days and weeks. Even if the JPY has a weaker outlook and the bullish trend remains intriguing, fixing mid-term contracts for transactions will be a dangerous game for financial institutions because of the consideration of possible interventions from a Bank of Japan which might be tempted to intervene.
However, as long as the price of WTI Crude Oil is volatile via the spot and futures markets because of the Iranian war, this makes it hard to intervene with sustained force. That is unless the Fed joins with the BoJ in a collective strike unit to try and kill off speculators. While there is a temptation to believe the USD/JPY could actually test higher water marks, day traders should be careful about betting too ambitiously for the currency pair traversing into bizarrely high realms. The month of May promises to be intriguing and USD/JPY speculators will need to be quite cautious.