USDJPY faces resistance at 160 after a strong rally, with traders eyeing the 158.96 support level as the pair consolidates amid persistent intervention risks and Bank of Japan tightening signals.
The pair sits just under a ten-month high after the biggest two-day gains since mid-September, and a shallow correction is expected with dips likely to hold above the broken 100DMA at 158.96, keeping bulls targeting 160 and then 161.00/161.33. Dollar support from hotter-than-expected inflation and hawkish Fed officials backs the upside, though intervention risk and BoJ tightening signals temper gains.
The USDJPY pair is trading just below a ten-month high as bulls encounter resistance at the 160 psychological level. Following the largest two-day gains since mid-September, the market is undergoing a shallow correction as stochastic indicators reach overbought territory. However, the pair remains supported by hotter-than-expected inflation data and hawkish Federal Reserve rhetoric.
The outlook stays constructive: dips are expected to hold above 158.96 (the 100DMA), keeping bulls in play for renewed attempts through 160, which would open 161.00 and 161.33.
The main risks are Japanese intervention near 160 and further Bank of Japan tightening signals, which are expected to temper the bulls.