USD/JPY retreated 0.38% on Monday, slipping below the 160.00 mark to settle around 159.70 after briefly reaching a year-to-date high near 160.50 earlier in the session. The day's trading produced a bearish reversal candle with a long upper wick, spanning a range from approximately 160.50 to 159.30 and closing in the lower half, marking the first significant resistance from sellers since the pair's rally began from February lows near 152.10 [1].
The Bank of Japan (BoJ) released its March Summary of Opinions, revealing a notably hawkish tone. One board member advocated for raising rates "without hesitation" if conditions remain stable, while another suggested a larger-than-usual hike to counteract the energy shock stemming from the Middle East conflict. The BoJ maintained its policy rate at 0.75% during the March meeting with an 8-1 vote, as board member Hajime Takata dissented in favor of a 1.00% rate [1].
Looking ahead, Tokyo Consumer Price Index (CPI) data for March is expected late Monday, with core inflation (excluding fresh food) forecast at 1.8% year-over-year. The Tankan Large Manufacturing Index, due Tuesday, has a consensus estimate of 16, up from 15 previously [1].
On the US Dollar side, Federal Reserve Chair Jerome Powell expressed a patient approach at Harvard on Monday, stating the current rate stance is appropriate and that the Fed tends to overlook supply-driven price spikes such as the ongoing oil shock. This aligns with the FOMC's decision to hold rates at 3.50% to 3.75% in March, where officials revised their headline PCE inflation forecast up to 2.7%. Fed Governor Stephen Miran, the sole dissenter at every meeting since his appointment, continued to advocate for rate cuts but raised his year-end projection by 50 basis points after disappointing inflation data, highlighting a growing divide between the committee's majority and dovish minority [1].
Technical analysis shows USD/JPY trading at 159.69, maintaining a bullish bias as it remains above the rising 50-day EMA and the 200-day EMA. Recent price action indicates only shallow pullbacks within a broader uptrend, with momentum cooling but not reversing. Initial resistance is seen at 160.30, with a sustained break potentially targeting 161.00, while immediate support is near 159.30 [1].
CONCLUSION
The USD/JPY's retreat below 160.00 reflects market reaction to the Bank of Japan's hawkish signals and anticipation of upcoming Tokyo CPI data. Despite the pullback, technical indicators suggest the pair remains in a bullish trend, with resistance and support levels closely watched. The divergence in policy outlooks between the BoJ and the Fed adds uncertainty, but the market appears to be consolidating gains at elevated levels.