The Japanese Yen (JPY) has come under significant pressure, with both GBP/JPY and USD/JPY trading near multi-year highs. GBP/JPY is holding firm near 214.78 after reaching its highest level since July 2008 at 215.91 last week, driven by elevated oil prices following renewed tensions in the Strait of Hormuz. Iran reasserted control over the key shipping route, citing the US naval blockade as a violation of ceasefire terms, while the US Navy intercepted an Iranian cargo vessel in the Gulf of Oman. These developments have kept oil prices high, negatively impacting the Yen due to Japan’s heavy reliance on imported energy [1].
Rising oil prices are complicating monetary policy for both the UK and Japan. For the UK, higher energy costs may prompt the Bank of England (BoE) to delay rate cuts and maintain tighter policy for longer. In Japan, persistent inflation pressures could keep the Bank of Japan (BoJ) on a gradual tightening path, but higher import costs may slow policy normalization. According to a Reuters report cited in Source 1, the BoJ is likely to hold off on raising interest rates at its upcoming meeting, as unresolved Middle East tensions continue to cloud Japan’s economic and inflation outlook [1].
Rabobank’s Senior FX Strategist Jane Foley notes that the JPY is the weakest G10 currency both month-to-date and year-to-date, with USD/JPY trading just below 160 amid fears of Japanese Ministry of Finance (MoF) intervention. Rabobank’s central forecast sees USD/JPY at 158 in three months and 152 in six months, assuming a hawkish BoJ and an easing-biased Federal Reserve (Fed). The upcoming BoJ and Fed policy meetings are expected to steer the Yen’s direction. If the BoJ does not announce a rate hike at its April 28 meeting, market participants expect strong guidance for a move in June; otherwise, USD/JPY could retest the 160 level, potentially prompting MoF intervention. Rabobank expects the Fed to ease again later this year, which could further impact USD/JPY [2].
Technical analysis for GBP/JPY shows the pair extending its advance above the 21-day SMA at 212.98 and the 100-day SMA at 211.21, underpinning a constructive near-term bias. The RSI at 60.82 leans bullish, while the ADX at 18.90 suggests the uptrend is present but not strongly developed. Initial support is at the 21-day SMA around 212.98, with deeper support at the 100-day SMA near 211.21. As long as the pair holds above these levels, the technical outlook favors additional upside [1].
Looking ahead, traders will closely monitor geopolitical developments and upcoming economic data releases, including UK labor market, inflation, and retail sales figures, as well as Japan’s National CPI. These releases are likely to provide further cues on the monetary policy outlook for both the BoE and BoJ and drive near-term price action in GBP/JPY and USD/JPY [1][2].
CONCLUSION
The Japanese Yen remains under pressure due to elevated oil prices and policy uncertainty, with GBP/JPY and USD/JPY trading near multi-year highs. Upcoming BoJ and Fed meetings, along with key economic data releases, are expected to set the tone for both currency pairs. Market participants are closely watching for potential intervention and policy shifts, which could significantly impact Yen performance in the near term.